Feeling Moody's

 | Oct 07, 2011 | 6:48 AM EDT
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It happens in a blink. Market's fine. Then Moody's comes out and downgrades a dozen British banks that we didn't even know were under review. The reason? Because the government isn't going to backstop them anymore the way it did. The major focus banks: Lloyds and RBS.

Of course, the downgrades come with a specific caveat that they at not related to actual business, but in this market all that matters is the downgrade. It doesn't matter that Moody's takes pains to say that it is really the removal of the government backstop that is precipitating the downgrades. No one thinks these downgrades can be that idle or random.

Plus, lots of shorts have been taken off all over the place and the group has been rallying, so people figure, what the heck, take profits.

So on the Moody's-inspired weakness in U.K. banks, prepare for Caterpillar (CAT) going down a buck and Alcoa (AA) rolling over and United Tech (UTX) and Boeing (BA) shedding gains.

That's the world we are in. It is a ridiculous world. I was in a back-to-school classroom last night and someone asked me about a stock and told me how well the company was doing. When I said that he didn't understand that Europe was in control, he pointed out that the company had very little business in Europe. I came back and said that if you wanted rationality, go find another casino.

This one just doesn't pay out enough of the house's money any more.



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