Same page finally..
Friday, July 22, 2011 at 07:42AM “As far as summit, watch for credit line extension promises to countries other than Greece as a ‘potential’ best news scenario for markets. If this doesn’t occur contagion fears will be rise again and market will react. A Greece deal is not enough.”..yesterday's lead into trading day.
It might not be the final communiqué, but the summit proposals hitting the wires just after 8am featuring the “EFSF’ expanded powers was just what the market was looking for (as above)….preventing contagion from spreading!. The components of the proposals take care of the markets big concerns (fears) as EU leaders decided to allow the EFSF to recapitalize banks (even if the Government is not operating in the IMF program) and allowing it to buy sovereign debt in the secondary market. Incredibly, EU leaders were finally on the same page and markets exploded up and really didn’t look back. Now only if US leaders can get on the same page!. All that Obama/Boehner did was take headlines away from Europe in the afternoon with nothing concrete, a deal is now unlikely by July 22 to make actual law by Aug 2 (per Obama earlier)
As far as the trading tape, the most interesting aspect was the lagging tech. Quite impressive Nasdaq composite still tacked on 20pts with no participation from tech. In all, it seemed nothing more than investors being tired with the ‘fading’ of strong reports and implosions of growth tech linked stocks that came in line and didn’t guide high. Instead of waiting for future reports, investors wanted out early to avoid more fading/blow ups and rotate elsewhere.
One risk diminishes today while another still looms, but market tape risk remains for further upside as noted yesterday.