Risk aversion was back in vogue in the London session as1Q corporate earnings expectations return to the fore. The IMF revised its estimates for US bad bank debt and a prominent investor called the latest run up in stocks a bear market rally – something we have been harping on for some time. This coupled with the hangover from the news yesterday that the Treasury will extend the PPIP deadline (suggesting little interest from the private sector for toxic bank debt) dampens the confidence that supported the rally in risk over the last few weeks. It now seems plausible that the PPIP will not work as well as hoped and that bank earnings will continue to disappoint. Reality bites. Full text »
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