I’ve written before about my frustrations with central bank intervention, and today I’ll write about it again. I just can’t trade on anything but central banker speaking dates. Yesterday, we had a pre-Draghi post-Draghi opening and today we had follow through. Will weekend rumors calm the overexcited? They’ve started already with the WSJ reporting that other ECB board members are a bit surprised by Draghi’s comments and who better than ZH to add fuel to the fire (here).
The best and maybe most actionable information would be this quote:
If the ECB does nothing next week, the markets will tumble.
I tend to agree, yet something other than talk is unlikely, and I can’t deny the markets reaction, so in-the-end who cares if things change or not? Paul Krugman seems to be ok with the status quo (here). With today’s market reaction who could disagree, deficits schmesifts!
First came Draghi and then a reassuring statement from Merkel and Hollande, unfortunately I rest sceptical of the Eurozone’s ability to create (and install confidence in) a federal banking system, overnight. You know the risk, but if perception is everything, maybe the risk can be swept under the carpet?
I’m still surprised by what could fairly be called parabolic, and nobody is calling Draghi’s bluff. That alone is surprising. The S&P Futures (ES) broke through resistance at $1375 and didn’t look back. Whether you want to trade the CAC40 or the S&P the results will be the same, yet…
This chart of the CAC40 is special. It’s represents a 9% move up in 2 days, are you kidding? I’ll go back to that quote from WSJ by way of ZH. The ECB had better pull something real out of their hat, or the markets will start sincerely doubting Mr. Draghi’s capacity, and quickly. The CAC40 will fall hard if the right politician interested in contradicting him, steps up.
I’ve also noticed that Gold is going nowhere. Does Gold know something the ECB doesn’t?
I might be proved wrong, for a day or two, but I personally don’t want to go long into this weekend. Cash is a position, and this weekend I’m sticking with some puts for fun, and cash.
Have a great weekend.