links for 2010-11-16

If Germany insists that investors in sovereign euro zone bonds share the pain in the future, why would these investors buy such risky bonds? Why lend to Greece, Ireland or Portugal when those sovereigns come back to the market in 2013, begging for cash like homeless drunks? The answer is that bond investors will not lend, except at unaffordable interest rates. Germany's strategy has only one outcome, the eventual ejection of the prodigal states from the euro zone. It is Berlin's strategy, unspoken but plain for all to see.

In the early months of the stock market’s rally from the March 2009 lows, some skeptics claimed that an abnormally high number of opening gaps were driving the market higher. This claim is important to consider because the premarket session tends to provide less liquidity than regular trading hours. So the open may represent a “minority opinion” on where stocks should trade…Gaps generally tended to indicate the direction of the close. Opening gaps received tepid support given the market extended them only 50 percent of the time. Both types of gaps had roughly the same influence on the final close.