Buy the rumor, buy the news continues to be the market pattern as long as participants have their central bank beer goggles on which turns all news into good news. The German Constitutional Court did what all expected them to do and blessed the ESM but did put a 190b euro limit on Germany’s exposure that can only be exceeded with parliamentary approval. Germany’s current contribution to the 500b ESM is 80b but that grows when a country asks for help and thus no longer contributes. All the other 16 euro nations have approved the ESM. Data wise, jobless claims in the UK unexpectedly fell, euro zone IP in July rose more than expected, Japanese machinery orders in July were up more than forecasted while India’s IP was up just .1% in July after a 1.8% drop in June, below estimates of up .5%. In the US, the MBA said consumers finally responded to low interest rates as refi apps rose 11.9% to a 4 week high after 5 weeks in a row of declines and purchase apps were up 8.1% to the most since June off near the lowest level since March.
