Kevin Depew, Minyanville, 10.2.08
Few corporate bonds are trading, and those that do are trading at levels that indicate a fear that there will be either massive bankruptcies - even with the passage of the bill - or that the holders of the paper are in serious trouble and in need of capital.
...There has been an ongoing disconnect between stocks and credit markets for months now and even the action on Monday did little to correct it.
Risk in equities remains high on both sides. You can't short stocks because if it is not already illegal, it is too risky to try and match wits (and capital) against the SEC, Treasury, Federal Reserve and Federal Government....Similarly, you can't buy
stocks either, because doing so means you are essentially putting your capital in the hands of the SEC, Treasury, Federal Reserve and Federal Government.
There is a facade of normalcy to the markets at this stage, a dangerous one. Because the markets are continuing to open a t9:30 a.m. like always, there is the deceptive sense that things are functioning. They are not.
This is an historic time, and a dangerous one.
Decisions will be made in the next two weeks that impact the functioning of markets for the next 25 years.