As we mentioned yesterday, there’s a palpable sense of relief in the markets. In fact, it feels a lot like… last October. But do you really think we’ve had the last big surprise?
The Mad Hedge Fund Trader sends out his latest musing:
“Now that traders are partying again on Wall Street, we have to ask, what will take the punch bowl away? The unemployment rate shooting over 10%, which could happen in April or May, would be my first pick. Losses on option ARM loans could accelerate, taking out a few dozen more regional banks, WAMU style. Another, until now apparently healthy corner of the financial market taking huge undisclosed positions in securities we’ve never heard of, could suddenly blow up. A giant hedge fund could close at any time, freezing existing investors in place, and dumping gigantic positions on the market. Defaults on some big, high profile commercial real estate projects could also pull the rug out from under the market. Given the magnitude of the move up over the past two weeks, we might even see a short seller bite the dust. And of course, if any of the administration’s $3 trillion in bailouts/ reliquifying/stimulus hit a wall that would trigger a sell signal. Party on ebullient traders, but do so close to the exit.”
Any guesses on the next shoe to drop?