To be sure, Thursday's market was a roller coaster ride full of news, rumors, comments, and headlines. And as someone who watched nearly every minute of the action, I can say that most of the moves made sense (although one in particular did not). But the point is that sometimes you can learn something from the action itself and after some reflection yesterday was definitely one of those times. Cutting to the chase, I'm of the mind that yesterday's action taught us that while there are indeed lots of distractions right now in the market, it's still all about Europe.
The first important move occurred in the pre-market. Futures had followed Europe (EZU) lower as traders began to fear that yet another EU summit would come and go without any real progress being made. Then all of a sudden there were reports that Germany's finance minister Wolfgang Schäuble had given indications that Berlin might be willing to talk about Euro bonds. Although it turns out that Her Schäuble‘s words had been misinterpreted (Germany (EWG) still demands that a fiscal union must be agreed to before any discussion of joint debt can be considered), it was worth noting that the S&P futures spiked on the news. This told me that even the slightest hint of a change on Germany's stance was worth about 0.5% on the S&P futures.
Next up, and still before the opening bell rang, was the final revision to U.S. GDP. Since the idea of slowing global growth has been a focal point of late, I felt that this would be a closely watched number. But when the U.S. GDP rate was confirmed at +1.9% for the first quarter there was very little reaction to the news. Thus, it was clear that this data was already "baked in" as the report didn't offer anything incremental to the global macro picture.
Then there was SCOTUS (Supreme Court of the United States). Most everyone was expecting at least some part of the Obamacare legislation to be struck down by the land's highest court. However, this was not the case and in a 5-4 vote, the law mandating that every individual in the U.S. buy health insurance was upheld. (As a quick aside, although the decision was considered to be a victory for the President, the reasoning behind the SCOTUS verdict meant that Obama had just passed the largest "tax" in history on U.S. citizens.) Surprisingly though, the stock market did not experience the sort of knee-jerk volatility that one might have expected from such a monumental decision. What this told me was that the algorithms and the computers were not ready for that particular verdict.