Courtesy of John Nyaradi
Global stock markets partied hard today as central banks poured liquidity onto the Greek firestorm
The European Cental Bank, acting in coordination with other major central banks, set off a global stock market party today as it announced plans to loan dollars to European commercial banks in an effort to offset the potential of a European credit crunch due to exposure to possibly toxic Greek bonds.
Ironically, this global action came on the third anniversary of the Lehman Brothers bankruptcy, the largest bankruptcy on record and one of the catalysts of the ongoing financial crisis.
However, the bond market didn’t join the party as Greek debt stays in the stratosphere nor did the Credit Default Swap market which is pricing in the near 100% certainty of a Greek default.
In duller news, Swiss banking giant UBS got slapped with a potential downgrade by Moody’s and had a bad day all around as it announced potential losses of $2 Billion resulting from alledged trades by a rogue trader.
RIM missed expectations again and was pounded after hours, down some 18% as revenues and earnings were feeble from the fabled Blackberry maker.
Economic reports were dismal and largely missed expectations, further confirming a slowing economy.
New unemployment claims rose, the Philadelphia Fed Report declined -17.5, the third negative month out of the last four, and the Empire State Index declined -8.8 compared to -7.7 previously, another miss of expectations.
Has it been a long, long three years since Lehman Brothers or what?
Global Stock Market Roundup:
DJIA (DIA): +186; +1.7%
NASDAQ: (QQQ) +34.5; +1.34%
S&P 500: (SPY) +20.4: +1.7%
Russell 2000 (IWM) +9.4; +1.3%
Tomorrow comes September consumer confidence.
Bottom Line: The party is a bear market rally so far, induced by the addict getting another fix, and most likely will be short lived. Dollar liquidity does nothing to cure Europe but only indicates how worried the green eyeshade bankers must really be. Markets are now approaching major technical resistance so we’ll soon know where things go from here. It has been a long three years since Lehman Brothers and, unfortuntely, more turbulence very likely lies ahead.
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