Equity futures came into the day up huge on comments out of Europe. Central bank news with the promise of massive money printing is music to the ears of traders looking to make money in the easiest environment possible. For the first time ever the European Central Bank (ECB) used jawboning to move markets as Mario Draghi said interest rates would stay low for “an extended period of time” adding they could even go lower.
That was music to the ears of investors because the ECB had been more conservative than our Fed.
Those comments came moments after Mark Carney, new head of the Bank of England, issued an unexpected statement on interest rates. Inflation be damned Carney, who just came over from Canada and was received with red carpet treatment and rock star status, says quantitative easing will continue. This means our Federal Reserve will have even more pressure not to be the odd man out by tapering while the rest of the world is printing. This is setting up what some may call a Goldilocks scenario for the stock market.
While some think “just right” is a perfect backdrop for stocks that means a lukewarm economy and that’s not perfect for the real lives of real people. It would be better if we had a golden scenario based on strength and resolve not unlike the emerging star in tennis from Germany. Sabine Lisicki followed up a huge upset win over Serena Williams with a come-from-behind victory over yet another higher ranked opponent to get into tomorrow’s championship at Wimbledon. Her grit is what’s missing in our economy, which has recovered far too slowly to erase massive jobs losses.
Even jobs that have been created aren’t the kinds that move the economic needle, although anyone that’s been lucky enough to get one is somewhat grateful. But we need better jobs to jolt the economy and trigger what Fed policy hasn’t been able to – a virtuous cycle. That would require passion for capitalism and joyful celebration of success and that’s not going to happen from the top.
Goldilocks…Unless Looking for High Paying Job