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Futures are screaming higher overnight on yet another European bailout deal for Italy.

According to unverified reports from La Stampa, the IMF is preparing a 600 billion euro ($794 billion) loan for Italy. The paper has refused to state where it got the information. (IMF denied this to Reuters)

But that small detail is of no consequence to traders hungry for some green on the screen after November saw $4.7 trillion wiped out from global equity values. If we were to open here, markets would gap up nearly 2%, breaking a seven-day losing streak for US equities. Asian stocks have already broken their 4 day losing streak, with the MSCI Asia Pacific Index gaining 1.3%.

A few caveats:

The bailout rumors are just that — rumors. Note that the U.S. is a major funder of the IMF, and a bailout of Italy with US Taxpayer dollars wont go over well in an election year.

Also note that the reporting on sales during Thanksgiving was filled with all manner of garbage (Sales climbed “16 percent to a record, said the National Retail Federation”)  I suspect we will see flat to 2% sales gains at best, and not these ridiculous outliers.

Regardless, don’t forget to bring your rally caps to work tomorrow. . .

~~~

UPDATE: November 28, 2011 5:12am

IMF is denying the report in statements (Reuters)

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

18 Responses to “Futures Scream Higher on Italian Bailout Rumor”

  1. rd says:

    My understanding is that all other debt is subordinate to IMF debt, so Italy would need to get its financial house in order ASAP or its previously issued bonds will do double duty as TP which would be devastating to the European banks.

    The austerity needed to get their house in order is likely to trigger a severe recession in Italy which will probably ripple out from there.

  2. Mike in Nola says:

    I was curious as to whether rally caps are deductible by CNBC personalities since they seem be required as part of a work uniform.

  3. woodhenge says:

    I believe in the Santa rally

  4. DrungoHazewood says:

    I’ve been around a long time and this Black Friday hype happens every year. All kinds of crazy numbers flying around that turn out to be bilge. As far as the huge gap up in the short’s face-you knew it was going to happen, but from what level? Well now we know. It seemed shorts were being careful, and taking profits along because of the October raping, but it’ll still leave a mark. This thing could really get rolling.

  5. past..

    “…this Black Friday hype happens every year. All kinds of crazy numbers flying around that turn out to be bilge…”

    “…As far as the huge gap up in the short’s face-you knew it was going to happen, but from what level? Well now we know…”

    maybe, Peep will take some time to, better, understand Forstmann..

    (from nearby thread)
    “… Ted Forstmann was in the thick of deal-making at that point (Forstmann, Little), but his name was above reproach.

    Ted thought younger people today combine a strange mix of materiality and immateriality. People he talked to in their 30s or 40s wanted to make money. They didn’t really care about producing or making something.

    Ted thought Alan Greenspan, via the Federal Reserve, was the central spigot of our current plight. In Ted’s words: “They print the money. When they print too much, it goes into activities that aren’t economic. When the interest rate is too low, people aren’t careful. Borrowers can pay back in depreciated dollars. They barely need to put any of their own money into a project. If interest rates are 7%, they need to calculate its potential profitability.”

    Ted recommended Nicole Gelinas’s book: After the Fall: Saving Capitalism from Washington and Wall Street. He thought she successfully made the case we did not need a slew of new financial regulations. If the Federal Reserve and other regulators had enforced the rules then in place, there would not have been a financial crisis. These are wise conclusions that could never penetrate the interests in Washington, Wall Street, academia, and the media. For each of these parties, such an acknowledgement would reveal their failure to halt the obvious beforehand. (See Moynihan, 1990, above.)

    I presumed Ted did not think Federal Reserve Chairman Ben Bernanke was an improvement. Whenever his name was mentioned, Ted either winced as if he had bitten into a lemon or exhaled a low moan.

    Ted was disappointed, but maybe not surprised, that I saw no other solution than to let prices, including assets and incomes, settle at a lower level, at which point the U.S. will be competitive again. This may have been a reason he simply could not speak at the mention of Ben Bernanke’s name.

    Ted Forstmann was a sterling example in a tarnished field.”
    ~~

    little wonder why He received, comparatively, little ‘Ink’–throughout his Career–as opposed to Others (i.e. Buffett, Welch, et al., ad naus…)

  6. RW says:

    The responses to the European crisis have had a shorter and shorter term impact so they have to give a really big kick to the can to get it down the road this time; i.e., the rally will be explosive and probably longer than the last two but a deal gets made in the interim or the next decline won’t be a small one …absent a solid deal it will make 2008 look good.

  7. pc says:

    I guess the rumors didn’t last very long cause the futures are headed back down. Maybe someone will release another rumor before market opens tomorrow.

  8. Onthemoney says:

    All the whipping around in equities seems to be setting us up for one of the biggest sustained moves in years, if the DAX is any guide.

    http://jamesgoodeonthemoney.blogspot.com/2011/11/year-of-cat.html

    Whichever way it breaks, it should be a decent ride.

  9. Market Panic says:

    Reports Of IMF Package For Italy Not Credible – International Financial Officials

    TOKYO (Dow Jones)–A report that the International Monetary Fund could offer Italy between EUR400 billion and EUR600 billion in financial support is not credible, people familiar with ongoing international discussions on the European debt crisis said Monday.

    The report is “not credible,” one of the people told Dow Jones Newswires.

    “I think it is baseless,” another source also told Dow Jones Newswires. “There has been no talk on something like that among (Group of Seven) authorities.”

    Italian newspaper La Stampa reported from New York on Sunday that the IMF could offer Italy between EUR400 billion and EUR600 billion in financial support to give Italian Prime Minister Mario Monti a window of 12 to 18 months to enact reforms sufficient to restore waning market confidence in Italy’s ability to repay its debt.

    http://online.wsj.com/article/BT-CO-20111127-706560.html

  10. gusgus says:

    In December 2010, the IMF agreed to expand its Quotas to some $760 Billion, of which $280 billion has already been committed. An IMF offer of EUR400 billion would tap all of its remaining resources and then some. This report has the IMF going “all-in” on Italy. This is not credible. What happens when Spain comes to the table next? Or Belgium?

    http://www.imf.org/external/np/exr/facts/glance.htm
    http://www.imf.org/external/np/sec/pr/2010/pr10477.htm

  11. dougc says:

    So many rumors and so little facts, it’s all they have to keep the market stable while they try to figure out a workable solution. If they fail or the market doesn’t think it is workable , watch out below. I am going to watch the European bond markets as a clue to progress and continue watching football,eating pizza and drinkinf beer.

  12. TLH says:

    The machines take the market down. They then take the market up. How else are you going to make money in a range bound market? The front running continues. All sanctioned by our government.

  13. rd says:

    @TLH

    I don’t think the front-running is just sanctioned by the government. Bernanke’s and Geithner’s policies appear to be focused on funding the front-running as well.

  14. number2son says:

    And P.S. … screw these markets. I’m going to go make something.

  15. dead hobo says:

    TLH Says:
    November 28th, 2011 at 6:07 am

    The machines take the market down. They then take the market up. How else are you going to make money in a range bound market?

    reply:
    ——–
    Yup, plus don’t forget banks playing games with Armageddon threats in Europe. This is, hopefully, the end of year rally start. Hedge funds still need to make money so that customers don’t go away in 2012. I suspect Europe will continue to be the gift that keeps on giving in 2012 when bank hissy fits resume control in January. If this scenario plays out, I plan to very aggressively buy into the most gut wrenching of dips at a 5% rate for each big dip that looks like it has legs up to about 25%. If the recovery has legs I will double down or more. Otherwise I will just scoop up profits from each 25% investment on the ride back up.

  16. JDinCT says:

    This rally looks like a gift to anyone that wants to get out of “tactical” long position- Barry!

  17. market_disciple says:

    This market is only for the nimble. Not sure why the market gapped up on Sunday, especially when it turned out to be a rumor.

    Luckilly covered my short on S&P last Friday when it was about to test 1,150 (Low of the day was 1,158). It actually started as a small hedge to my long positions on silver and the dow, which I sold on Nov. 18th. Now I’m back to 100% cash again to re-evaluate this crazy macro environment.

  18. Bill Wilson says:

    I think this is a one or two day wonder.

    Truth be told, I’ve learned to respect the price action more than my own opinion. So, if the S&P crosses the 50 day moving average, I’ll be going long with a stop around 1200.