Of course, that's not how the mainstream media is reporting today's market rally. Instead, they'd have you believe markets were responding positively to events in Europe even though all the news coming from them has been getting increasingly worse:
U.S. stocks rallied Wednesday as investors digested comments from the European Central Bank and weighed a new proposal for European-wide bank rescues and bailouts.Really? What were these comments that the Street just ate up?
The ECB left interest rates steady at 1%, though the decision was not unanimous, ECB president Mario Draghi told reporters after the meeting.
So investors in America are besides themselves with joy over the European Central Bank leaving rates the same? I find that doubtful, but maybe prevailing wisdom was they were going to raise interest rates.
"A few members would have preferred to have a rate cut today," he said. Many analysts expect the ECB to cut interest rates by a quarter percentage point at its next meeting in July, which would bring rates down to a record low.
Huh? A few ECB members wanted the rate cut to help the recovery and encourage spending and several analysts expect them to do just that, but they opt for keeping them the same and that's the comments made that have restored US investor confidence?
Here's the reality. The US is rapidly approaching yet another debt ceiling crisis. Analysts and economists alike are warning that the US must get its deficit spending under control or risk financial calamity. The win by Gov. Walker in last night's recall election has been seen by the political and investment class as an endorsement by the American people for enacting tough economic policies that will bring the country's fiscal house in order. It's also a signal that real recovery is around the corner if and when President Obama is sent into retirement by voters.