The Market Gets Excited About Central Banks Coordinated Intervention

Author Larry Berman

Posted: 17 June 2012 re-posted from etfcm

The fact that the TSX underperformed so miserably yesterday made little sense to us. The tape in the US clearly showed that risk was back on as the market gets excited about a global central bank coordinated intervention for European debt and that Greece will vote with a bias to remain in the EMU. That should mean the market losses some anxiety at least and starts to focus back on earnings, which will be no picnic to be sure, but better than focusing on the world’s banks falling apart.

The European banks are trading stronger this morning and have not made lower lows this week—a notable sign of stability. If the ECB comes with a big bazooka, the improvement in psychology could last for a few months as it has in the past. It seems like this time, the band-aid solution actually makes some sense if they can pull it off. We just might be surprised at how high the bounce could be and how long it could last. For the TSX though, we really need to see the world growth outlook improve for commodities, and we fear 2013 will hit the US pretty hard, so it’s a bounce in what likely is a continuing bear for global growth.



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