Daily Investment Interpretations

December 8, 2011


2011-12-8: (Thursday Night): The markets plunged today: Dow drops below 12,000, Stocks Crushed; All Eyes on EU Summit. The NASDAQ Composite descended 52.83 points (-0.01%) to close at 2,596.38. The Dow advanced 198.67 points (-1.63%) to 11,987.70; the S&P 500 tumbled 26.66 points (-2.11%) to settle at 1,234.35. Oil retreated to 98.03: gold moved down to 1,712: Hey, what happened to gold? The VIX crept upward 1.92 points to 30.59
    Today, it was the European Central Bank's turn to sucker-punch the markets. Mario Draghi, the ECB Presidentm announced to the media that the ECB's charter prohibits it from rescuing European states. (Its charter is limited to fighting inflation, not to save the Euro.) Of course, if the Euro fails, there will no longer be a need for a central European Bank, since there will no longer be a common currency. To be fair, Mario Graghi may not have that much personal influence over go-out-on-a-limb decisions such as he's being asked to make. There's probably a Board of Governors who have a say in (or may even vote upon) the actions taken by the ECB.
    In two pieces of good news:
    U.S. jobless claims fall sharply to 381,000  
    Household debt shrinks for 13th straight quarter  
    Buy euro rumor, sell euro news  This latest almost-10% uplift in stock prices is suggesting a classic case of "buy on the rumor, sell on the news".
    Mark Hulbert warns that there is an excess of positive sentiment that will derail further stock rises.    
    A chart that undermines U.S. spendthrift image 
    Congress insider-trading-limit vote delayed   
    Europe finds its banks short 114.7 billion 
    Euro-zone economy may contract in 2012- ECB
    European 'fiscal compact' in the works?
    Draghi erases Trichet's ECB errors

    State of the Markets articles include:   
    Techncial Talk: Bulls Standing Aside; Support Being Tested  
    ECB's Draghi Announces Unorthodox Measures But Backs Away From 'The Bazooka'   
    ECB Cuts Benchmark Interest Rates By 0.25% For Second Time  
    Bank of England Leaves Rates Unchanged     
    Risk-On/ Risk Off Trade  
    Japan Machinery Orders Dive Again in October  
    Weekly Jobless Claims Come In Well Below Expectations  
    Bloomberg Consumer Comfort Index Shows No Improvement  
    Market futures are flat tonight after this headline: Europe summit fails to reach full agreement