Another juked up opening. Another S&P nightmare where if you buy at the top you are just taking people out who bought the close. What are the chances that you get a huge move from here based on Sarkozy and Merkel saying the right things and giving you three weeks of pain and turmoil in the interim? Is the positive reaction to the Dexia bailout a sign that there is a plan after all? Is it is a sign that it was easier to do than we thought?
Or is it simply relief?
We tend to look at all these through our own prism. Bear Stearns was first. Is this Bear Stearns? Not really. That got bought by JPMorgan (JPM) with help from the government.
Is it Citigroup (C)? Not really. Doesn't sound like the plan is to nurture Dexia, although there is a provision that if the government makes money with the new Dexia, then they can get something.
Altogether it doesn't sound like anything we have done here. But it does take the pressure off and shows that something good can happen.
Why is that important?
Because most of the stocks we follow with the exception of Bristol-Myers (BMY) and Kimberly Clark (KMB) -- I am not kidding, those are the only two good ones -- say that even Dexia couldn't work out and that there would be just a collapse of all banks in one fell swoop. The fact that something as COMPLICATED as Dexia could be dealt with, with all of the public-sector financing issues it has going, says that a less complicated bank might be able to be dealt with, too.
In other words the fact that Dexia, a cross-border bank (Belgium and France) with no real deposit base could be fixed this easily says that other banks might not be that difficult to address. Of course, they can be not difficult and yet still costly because of all the sovereign debt that is owned. That's different from Dexia. And unlike Dexia, the clock is ticking on the Greek sovereign debt for almost all of the major banks out there that haven't written it down to 50%.
So, consider the futures gain one that says, "Wow, we are still breathing." That's never been a great reason to buy stocks.
At least when they are running, it isn't.