US stocks still flashing a bit of the glow of yesterday’s rally, amid optimism that the ECB will step up its bond-purchasing program. S&P 500 futures up 6, DJ futures up 50. Ten-year yield at 3.00%, a psychologically important marker. Euro at 1.3179.
ECB statement didn’t alter anything. Details on its bond-buying program will come in the press conference, which begins 8:30 a.m. New York time. The central bank is expected to announce that it’s continue to cancel its planned exit from its bond-buying purchases, and at least continue it at its current pace, if not step up purchases.
Hello, McFly? Did this program really do much to solve the problems when it was first launched? Think, McFly, think. Look, the market doesn’t really if the ECB has a viable solution, it just wants something to trade on, and it’s going to get something this morning. But this editorial in the Irish Times by Wolfgang Munchau gets to the heart of the matter:
The right answer to insolvency is default – not liquidity support. Let the German government pay for the German banks, and for the recapitalisation of the European Central Bank, which may need to be refinanced under such a scenario as well. A default would cause havoc, no doubt, and would cut Ireland off from the capital markets for a while. But I would suspect that the shock would only be temporary. With a more sustainable level of debt, and the benefit of a real devaluation, Ireland should be able to pull through this.
Go read the editorial; one thing Munchau makes clear, all these bailouts and liquidity supports are not the answer. Kicking the can down the road won’t work when you’ve got more cans than road.
Here in the US, weekly jobless claims come out at 8:30 a.m.; been trending near 400,000 lately, but it’s expected to rise to 423,000 this week. PepsiCo spending $3.8B to a majority stake in Russian beverage company Wimm-Bill-Dann Foods. Retailers reporting same-store sales for November.