Shock and awe at last!
by Peter Switzer
The sensational six that helped turn around markets and possibly pave the way for Santa to bring a rally to the stock market for Christmas were: the ECB, Federal Reserve, Bank of England and the central banks of Canada, Japan and Switzerland.
It’s thought that there was a European bank looking at a spot of balance sheet bother and so the big brothers of the banking system — central banks — came offering money to the system.
The Dow closed 490.05 points, or 4.24 per cent, higher to 12,045.68 and the S&P 500 gained 51.77 points, or 4.33 per cent, to 1246.96.
Now, this isn’t the endgame solution but it buys time and treats the symptoms of the budgetary and debt problems that have been troubling Europe.
Clearly the overtures by the PIIGS countries to address their budget largesse problems has made it more palatable for the central bank rescue and I reckon we’re now on the doorstep of progressive developments which will improve the situation in Europe.
As I say, we’re not there yet by a long chalk but each step towards dealing with threats to the euroland economy and the related banking system builds up confidence and makes investors return to stocks while chasing off the short sellers, the hedge fund villains and the bond vigilantes.
With a bit of luck, some bond vigilantes were ‘nuked’ this morning!
Meanwhile, the Yanks continue to see a better US economy with the Beige Book painting an improving picture of economic activity and the ADP private sector jobs report coming in unbelievably better than expected. Employment in the nonfarm private business sector rose by 206,000 in November.
It has to be a big day on the market today and lets hope we can have a nice rally into Christmas!
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Published on: Thursday, December 01, 2011
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