Market Talk

Investors initially didn’t care much for what the ECB had to say and the jobless claims report. But retail and home sales really overshadowed everything else today and stocks soared for a second-straight day.

The recent string of better-than-expected economic reports is finally boosting investor sentiment, especially as Europe has really dominated market action over the last few weeks. But this shifting tide toward U.S. data is a welcome development as the government’s report on November nonfarm payrolls is due Friday morning. We discuss it all and more on The News Hub:

US stocks rally for a second straight day, as markets overcame disappointment over what the ECB didn’t do, focusing instead on what it did do.

DJIA jumps 107 (1%) to 11362, S&P 500 gains 15 (1.3%) to 1222 — the second time this year it’s been up more than 1% two consecutive sessions — Nasdaq Comp rises 30 (1.2%) to 2579.

This put stocks close to two-year highs. That’s something that was hit in the oil patch, as crude rises to a two-year high of $88/bbl.

Yeah, that’ll be great for the consumer.

I got one of the strangest emails I’ve seen in quite a long time in my inbox this morning. It’s this Rice University study that finds, ready for it?, that people won’t follow “losers.” Besides the just weird use of the term “loser” in something presenting itself as a scientific study, it struck me that this didn’t reveal anything we didn’t already know from Lord of the Flies.

Rice U. study: Low-status leaders are ignored
How a leader is picked impacts whether others will follow

HOUSTON — (Dec. 2, 2010) — People who are deemed social misfits or “losers” aren’t effective leaders, even if they are crusading for a cause that would benefit a larger group, according to new research from Rice University, the University of Texas and Universitat de Valencia.

The study’s authors observed the contributions of 80 participants in a repeated public-goods game and found that players were more likely to mimic the actions of a leader they perceived as a high-status individual; they ignored leaders perceived as low-status and, when they had a chance, punished them for trying to lead.

“In a team, naming someone a leader is not sufficient to create effective leadership,” said Rick Wilson, co-author of the study and professor of political science and statistics and psychology at Rice. “The status of the leader — the way in which the leader is chosen — determines the extent to which the rest of the subjects will follow.”

So the practical takeaway here is? I don’t know. What’dya they do at Rice all day?

The ECB disappointed the market with what it said, but it encouraged the market with what it did. We explain.

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.