Photo: Wikimedia Commons
And suddenly, after a rally, and a few cooperative headlines, everything is suddenly bright and happy!BTIG’s Dan Greenhaus expands on this:
Over the course of the last two months, we have talked about how markets would be able to rally in the face of amazing amounts of uncertainty, if only headlines would cooperate. On the economic side of things, the data has cooperated to a larger degree than even we expected. Whereas we spent much of August positing that the U.S. was not in or entering a recession, much to the consternation of many clients, it now appears quite clear that the U.S. was not only not in recession in Q3 but that GDP might grow as much as 2.5%, a relatively healthy pace of expansion (the first estimate for Q3 GDP will be released on October 27).
The European headlines have been far less cooperative but over the weekend, the news that Dexia would sell 100% of Dexia Banque Belgium to the Belgium government for €4 billion while also securing some €90 billion in guarantees was greeted enthusiastically by U.S. investors. Also of importance was the announcement that Huijin, the largest shareholder in ICBC, CCB and other Chinese lenders, would be adding to its stake by a not inconsiderable amount. Besides representing a vote of confidence in the bank shares (or at least the perception of confidence), it should not and did not go unnoticed that Huijin took stakes in these lenders in September 2008 and October 2009, not terrible times for investors to have “gone long.”