The Santa Claus rally may finally be here. In an ironic twist, as Corzine’s firm is in bankruptcy and he is at personal risk of prosecution, we are rallying because for all intents and purposes, the ECB has allegedly told banks to load up on the MF Global trade. Banks are supposedly using ECB money to buy up short dated Italian and Spanish paper. Corzine must be bitter – his trade is the latest bailout.
I’m not sure it will work but am along for the ride for now. It is too thin and any ECB money to buy bonds and year-end flows will be exaggerated.