At times, I have described Good News as Bad — meaning that is could encourage the Fed withdrawing its accommodation, raising rates, pressuring margins, earnings and equity prices.
Today’s coordinated central bank intervention is the opposite: A Euro-zone bank on the verge of collapse prompted this extraordinary action.
So this a case where the news is so Bad it becomes Good for stocks: The financial system is so (choose 1 or more) vulnerable / compromised / inter-related / fragile that it required the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank to coordinate a joint liquidity event. So Bad News (near collapse) becomes Good News (equity rally).
The volume was so-so, except for the end of month/quarter buy on close surge; Monday’s volume was light as well. So this runs to 1250, maybe even 1300. Does it have legs? Will the surge suck the traders in (or trade the suckers in?)
Of course, these actions reflect the underlying weakness, and adds to the eventual bill to be paid (interest and penalties continue to accrue).
But tonight, we drink !
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