Friends
ECB President Mario Draghi let the markets know that he is prepared to do whatever it takes to preserve the euro. Ok then. When his comments hit the wires early this morning before trading began, the futures turned from negative to positive in an instant, and we were off to the races. When trading began stocks rose more than 200 points in the first hour of trading. Remember, on the domestic front we have talked about “don’t fight the Fed” for years now, and today we got a dose of “don’t fight the ECB”. The bears were caught leaning to the downside and short covering ruled the day.
By the close, the Dow Jones Industrial Average was up a tasty 211 points to finish the day at 12,887. The S&P 500 was up 22 points to close at 1360. Gold was up 6.60 to trade at $1614 per ounce, while oil was up $.44 to trade at $89.41 per barrel WTI.
It is difficult to get too worked up about these type of days because who knows when the next negative statement will take the air right out of the rally. Rallies built on the promises of Central Bankers or Politicians tend to leave me a bit skeptical. Oh, don’t get me wrong, I love when stocks go up (especially the ones we own), but, as we have said before, we like when things go up for the right reasons. The promise of more punch for the punch bowl does help stocks, but for how long? We have seen the effects of these words and/or actions become less and less sustainable. The old law of diminishing returns.
All right, I’ll stop raining on today’s parade. I guess after years of “Europe” let’s just say I’ve become jaded. Tomorrow we’ll get our first look at 2nd quarter GDP. Maybe we’ll actually have something real to rally on if the number is better than expected (and expectations aren’t very high), or perhaps we will actually be dealing with “reality”.
We’ll let you know what happens.
Have a nice evening everyone.
