Thursday, July 26, 2012

Stocks Scream Higher on Euro Hopium from ECB's Mario Draghi

Might as well call him Super Mario the way ECB President Mario Draghi is capable of moving markets by moving his lips.

Speaking at an investment conference in London, Draghi was light on specifics but strong on rhetoric, saying:
"Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."

"To the extent that the size of the sovereign premia (borrowing costs) hamper the functioning of the monetary policy transmission channels, they come within our mandate."

Easy enough. Make some bold-sounding statements, signal to everyone that everything is under control and viola! the Euro climbs above 123 to the US Dollar, major European indices jump 1-2%, Spanish and Italian bond yields drop and the Dow is good for a 200-point rise. Ponzi-nomic, centrally-planned financing at its uninspiring best.

Everybody goes long, and tomorrow or Monday, everybody can get short. Wash, rinse, repeat.

That is how Ben Bernanke and Mario Draghi roll. And, you and I get rolled, again.

Nothing changes.

Here in the states, the small sampling of economic data was mixed to negative. Initial unemployment claims fell to 353,000, from an upwardly-revised 388,000 in the prior week. Durable orders gained by 1.6% in June, but, ex-transportation, were down 1.1%. Pending home sales fell 1.4% in June, a distress signal for housing, as June is traditionally one of the strongest months for real estate.

Volume was actually a notch or two higher than usual, another telling sign that more and more people are learning the game and jumping in whenever futures ramp up at the open.

Dow 12,887.93, +211.88 (1.67%)
NASDAQ 2,893.25, +39.01 (1.37%)
S&P 500 1,360.02, +22.13 (1.65%)
NYSE Composite 7,754.41, +146.85 (1.93%)
NASDAQ Volume 1,912,905,750
NYSE Volume 4,401,349,500
Combined NYSE & NASDAQ Advance - Decline: 3897-1671
Combined NYSE & NASDAQ New highs - New lows: 214-146
WTI crude oil: 89.39, +0.42
Gold: 1,615.10, +7.00
Silver: 27.45, -0.02

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