Stunning 4 percent plus move in the S&P5oo on the back of Mario Draghi’s comments he will do “whatever it takes” to save the Euro. It got another kick today when Draghi wasn’t refuted by the Angela Merkel and the Germans.
The markets interpret “whatever it takes” as a signal quantitative easing in the form of direct purchases of periphery sovereign bonds is imminent. Policymakers, not just in Europe, but the U.S. and China, are now painted into a corner to deliver the monetary goodies.
Equities do seem to be pricing a bigger monetary blast than gold, which is up a little less than 2 percent on Draghi’s comment. Could be the yellow metal began its move earlier in the week on the Hilsenrath WSJ piece that the Fed is ready to begin a new round of QE. Gold is up 2 1/2 percent for the week vs. 1.9 percent for the S&P500.
Have a great weekend.
(click here if chart is not observable)