Draghi: Not Afraid to Act

European indices are enjoying sharp rallies today, led by the banks. The gains have increased throughout the day, since oil reversed to the upside.

Most markets are higher by almost 3%.

U.S futs are at session highs, looking to extend to gains enjoyed on Friday.

In a related note, the ECB President, Mario Draghi, was especially blunt in a statement issued today, offering succor to the markets, unlike his American counterpart, Janet Yellen.

“In the light of the recent financial turmoil, we will analyze the state of transmission of our monetary impulses by the financial system and in particular by banks,” Draghi told European Parliament lawmakers in Brussels on Monday. In addition, the ECB will examine the impact of renewed declines in energy prices and “if either of these two factors entail downward risks to price stability, we will not hesitate to act,” he said.

I mentioned this eventuality last week, as the current paranoia surrounding European banks could be easily handled by the ECB. With this backstop, a rally of extremes is most likely to occur in US markets tomorrow.