"Bad is good, and good is better," appears to back in vogue as the biggest short-squeeze in stocks since Brexit has sparked a veracious - if low volume - bid for everything investors hated just a couple of weeks ago. As Bob Pisani exclaimed "the bulls have regained control of the narrative," as form fund manager and FX trader Richard Breslow is worried as it seems investors want to be bullish again... just because.

Via Bloomberg,

This is all very fascinating. The clear majority of everyone I’ve heard from today exudes some form of bullishness. What a difference a week makes.

Which is something probably best kept in mind. Traders are trying to put things into “perspective.” Which is another way of saying that, aside from the occasional liquidity lapses that get all the attention, they continue to believe that the fix is in.

The Italians are as close as ever to getting a properly populist government. One that was described for months as a disastrous possibility for the country and Europe as a whole. Reaction? A modest widening of 10-year BTP spreads to bunds. It’s difficult to even pretend the move has been dramatic, because it has gone to levels not even close to where they flew to when traders thought there was a remote chance this could happen. Why? Because there is a blanket assumption that the ECB stands ready to rip the eyes out of anyone who causes too much trouble with their shorts.

The euro is up modestly today but struggling to regain the $1.19 level. A little above there will be an useful pivot to trade failure versus squeeze. Something to keep in mind with the dollar index showing some early signs of running out of momentum after its stellar run.

As to Malaysia, the story seems to go that short-term market pain will morph into long-term benefits. I keep reminding people that Malaysia is on holiday so stop thinking local markets are taking it all in stride. The ETF and NDFs haven’t. Besides if you let it out of the bag that you are intending to buy the dip, it either won’t happen or if it does, you probably shouldn’t want to
An increase in the hot war in Syria? Feels like it’s getting less coverage than falling rents in the outer boroughs. For some reason, I’m told the shekel doesn’t care so why should I?

I guess in many ways, the bulls have the evidence of their models’ price series on their side. But at the risk of going out on a limb, I think the general calm has something to do with not understanding the risks, a strong dose of complacency born from experience over the last decade and everything to do with the 10-year Treasury yield having stopped exactly where bulls were praying it would....