Divergence in Equities and Bonds

Was a weird Friday in the markets.  One thing that jumped out at me was that stocks were up and treasury yields fell...a bit of a divergence.

This is probably a good indication of the market's overall uncertainty as we head into a weekend with important elections.  I give it a strong chance that the market merely reacts and quickly corrects back to pre-election levels to the outcome of the Greek election with a small chance of everything hitting the fan.  The lowering of yields was likely the institutions protecting themselves from the "hitting the fan" scenario.  We'll see.

TLT

Yikes...

France is having some employment problems...not an uncommon problem for many countries today.  It's not the employment problem that is scary, it is the socialist president's ideas of how to suppress further unemployment that is down right terrifying.  Here is a section from this article:

Employment statistics from France reinforced recent data showing a slowdown in the European labor market. The jobless rate in metropolitan France rose in the first quarter of 2012 to 9.6 percent, up 0.3 percentage point, the national statistical agency, Insee, reported.
 Faced with the growing jobless problem, the new Socialist president, François Hollande, is planning new rules to make it more expensive to lay off workers, the a French minister said Thursday.
 Labor Minister Michel Sapin told France Info radio that the government would try to make “layoffs so expensive for companies that they’re not worth it.”

Way to go France.  Looks like you have a real winner on your hands.

TLT 

Late in the Day Turn Around for Stocks

The buying this afternoon gave the first long set up that I've seen in a while.  It's likely that lots of traders are looking to trade a bounce, the only question is will it bounce now or later.

Stocks are pretty much oversold across the board and the run up in bonds in crazy to say the least.  We'll probably see a good bounce this week, unless there's significant news from Europe that drags the market down.  The key indicators to be watching are bonds (TLT) and the Euro (FXE).  Note that even when stocks were negative earlier today, the euro was still up and bonds were still negative...that was a good sign play the market to the long side.

We'll see what happens.

TLT