ENJOY THE DELAY…

Did they do it? Were they successful in preventing a public run on the European banks? The fact is that there has been an institutional run and a massive liquidity pinch. Without the FED’s lines, there would be no Euro liquidity! But we don’t need to worry about that today.

Europe got into this mess and Trichet, the old French bulldog, refused to allow the same kind of intensive easing and stimulus in Europe as we have enjoyed under the tutelage of Dr. Bernanke, for fear of runaway inflation. He held the line for a few years and was just “retired”. In his place is is Draghi, a bunga-bunga partying Italian whose first move was to lower interest rates. A perfect choice for the job of Chief Bank Bailer-Outer!

So now the Europeans are on board; hook, line and sinker with another 1 full point of room to drop rates.  

The market took that news, as they have after any coordinated releases, and ran with it. Beaten down momentum stocks rallied hard on short covering. Technology partied hardy. Banks breathed a sigh of relief and commodities and materials could feel the inflation. So after a scary drop early in the week, the markets have almost made it all back and we are again bumping our head into serious technical resistance.

Don’t worry about weak consumer confidence or same store sales. All that matters are that Central Bankers the world over have things firmly under control. And remember, even in the disaster year-end of 2008, equity markets stabilized through the holiday season. The final leg down didn’t start until late January and continued through early March. Does that mean we’ve got the all clear sign? I highly doubt it, but buying “deep value” even in more volatile sectors will be the way to play the year end.