Snapshots From Yesterday's Markets Coverage

As I listened to CNBC and Bloomberg yesterday morning, two segments caught my attention. Since I'm writing this on Tuesday morning, I don't know what the S&P close was for the day, but I'm assuming it remained at or above 1190.

The first, on CNBC, involved a portfolio manager being interviewed by Melissa Lee. I rarely watch the network past 9AM, since I can't stand the overly-pompous, self-important Jim Cramer, now a regular co-anchor at that timeslot. In any case, Lee was on the floor of the NYSE interviewing people amidst the equity market's surprising rise to around 1190 on the S&P.

I didn't catch the man's name with whom Lee spoke. He wore a suit, so that made him not a floor trader. He matter of factly predicted that this was a rally into which many investors are selling. That it ignores the very real, large-scale European financial problems which are nowhere near resolved.

I recall, at the end of his sobering remarks to Lee, him saying, in answer to her stock inquiry about positions, that,

'We have a long way down to go from here before it's over.'

Perhaps we often filter in order to hear what we want to hear, but I must admit that I share the guy's sentiments. My proprietary volatility measure remains high. For options positions, it would signal puts. My proprietary equity allocation signal has been touching levels, on the worst days of this month, which suggest short positions in only another month or so.

Later, around 10:45AM, on Bloomberg, veteran, well-respected private equity investor J. Christopher Flowers was interviewed prior to his departing on a trip to Europe.

The Bloomberg anchor asked Flowers to compare the current European crisis to what he's seen in the past few years, including the US financial crisis of 2008. Flowers replied, without hesitation, that it's worse now.

He allowed that there was a chance that things might work out, but he wasn't at all sure. His demeanor seemed rather sober and grim. Unlike Kyle Bass, he wasn't firmly coming out and announcing a bet on financial defaults in Europe. But he clearly believes its very possible.

Then, just as I began writing this, a guest on Bloomberg noted that the equities rally of the past few days may be a result of reported needs by large US pension funds to get longer on equities. He cited over-exposure to the fixed-income problems in the market, and/or a need for higher returns, due to low-interest rate policies at the Fed. Then he noted the quarter's end on Friday, and warned that much of what we are seeing this week may, in fact, simply be window-dressing for that date.

In closing, he cautioned against remaining long at the market's close on Friday.