ECB Calms Markets
What a difference a day makes!!! The DOW jumped 405 points today after the EU decided to print money.
Then all other markets fell in line. Bond interest rates rose; the Dollar fell; Gold fell; and Oil/Gasoline rose.
In the news today……
EU pumps $1 TRILLION – in the European system to stabilize the route. Last Thursday/Friday, there was complete lack of faith in the European Central Bank as money fled Europe for stability – and ended up in the US Dollar. The lack of action by the ECB was startling. So, over the weekend, as calmer heads prevailed, the ECB made about $1 TRILLION available to any EU nation that needs it. Today, the money markets were calmed a bit – and the Euro gained against the Dollar after its route last week. The ECB is also buying “government bonds” to provide liquidity to the European nations (think Greece). The purchase of government bonds had previously considered a truly last resort and was not even mentioned because it was so toxic. Looks like a delaying tactic to me.
US FED open window to Europe – and this is the window that it closed a few months ago because it thought everything was okay. This allows European and other central banks to borrow from the FED as needed – no limits imposed. I wonder what type of collateral they will be presenting to the FED? – Greek bonds?
OECD points to slowdown – The global economy may be slowing down, said the OECD this morning, amid early signs that a surge in growth in China and Brazil is coming to an end. “In most OECD countries signs of slowing growth are tentative, but stronger signals have appeared in France and Italy, and some evidence of a potential halt in expansion is emerging in China and Brazil.” When the world slows down, so do US exports…..
Safety lapses and paper profits at Transocean – Apparently, Transocean has made a $270M profit from insurance payouts on the oil rig that exploded in the Gulf of Mexico. The $560M insurance policy Transocean took out on the Deepwater Horizon rig was greater than the value of the rig itself, and the profit more than covers the $200M Transocean is expected to pay out over the disaster. Meanwhile, while it touts its safety record, a closer look shows that Transocean has been involved with nearly 75% of deepwater rig incidents that prompted federal investigations since 2008. Now a conspiracy theorist would follow this money and look for some sort of sabotage.
Here are the last numbers for today:
Dow Jones 30 Industrial – 10,785 (up 405)
10 Year Treasury Bond – 3.54% (up 0.11%)
Euro – $1.2793
Gold – $1201 (down $9)
Oil – $76.80 (up $1.69)
Gasoline – $2.17 (up $0.05)
