Monday, August 15, 2011

A Normal Day

Been a while since we have had one of these - a nice change to see stocks moving on their merits rather than the macro.  Most of this week's economic reports are inflation or housing related - neither of which is going to move markets much as inflation is not a concern of Bernanke as he has outlined 2+ years of easy money, and housing is an after thought.  Frankly we did not even get that much of the "housing is recovering!" cheerleading we get almost every summer when sales pick up in May, June, July (as they always do, since its seasonal).  Maybe after doing it every year for 3 years in a row, the cheerleaders are finally tired out.

In its first week of bond buying Italian and Spanish debt, the ECB came in at 22b euros ($32b), way over expectations of 15b.  So that 'normalization' of Italian and Spanish 10 year debt, is all outside interference.  Until that ESFS is up and running it's all going to be on the ECB.

That's a hell of a pace - $32B a week would be $1.66T annualized, which is like 2.75x QE2. Obviously the hope is they wont have to continue this pace with the 'threat' of an unlimited buyer behind the market.

Interestingly all the fretting over France has seemed to disappeared today, with Merkel and Sarkozy supposedly going to wave a magic wand.  I'll still put chips on the idea that before this all ends, the ECB will be sucking up French debt too.

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