Investors seemingly always look to the weekend for catalysts and position so by Friday’s trading close, especially if there is a summit of major importance as was scheduled for Friday, Dec 9. Well, not this time around as all news flowed prior to timetable catching more than a few investors off guard. The European charade was basically concluded by the opening of US trading on Friday, Draghi’s ECB surprise comments on Thursday overshadowing what came to be expected...a ‘relief’ band aid summit agreement. The markets hysteria on Thursday (big down) and Friday (big up) is just commonplace 2011 action.
New debates will emerge; new and old speculation will come again. As discussed, watch (still) the Eurozone bond markets to be the signal for equities. While summit’s expectations came down during week and end result was underwhelming, Sov’ yields didn’t widen much as in previous underwhelming summit days. A bazooka result to keep calmness in peripheral Euro bonds may not be needed with all that has been done recently. The ECB liquidity measures were overlooked last week, they will be a big help here.
Underneath the Eurozone mess was continued unfavorable guidance continuing in tech (majority). Noted, GLW, OVTI recently, there has also been HTC and last week TXN, ALTR, LSCC all dropped guidance. Example LSCC dropped to -14-17% from -4 to -9%. These were not expected cuts, these co’s updated just recently. Maybe, it’s a good thing SP came out of last week up 1% as no one is really paying attention yet to what damage has already been done by Europe to the real economy. FDX will be eyed on Thursday for all of the markets. Also company analyst days will be in focus ie GE’s this week for 2012 guidance. Global flash PMI’s are the first December economic activity barometers we’ll get mid -week.