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Thursday, December 3, 2015

Thursday -- Sizable, Because It Works

S&P E-mini Futures:
Wild ride after Draghi largely disappointed. Up, down, all around.

Draghi extended ECB asset purchases for another six months. Not what the markets wanted, but should have been expected after all the "unanimous" nonsense by economists cited previously.

From Monday's post:

Markets may be too primed for the ECB's rate decision of Thursday, where Draghi has already used "whatever it takes" to such great effect that Bloomberg ran this:

ECB Left With No Choice But Action After Draghi's Priming

"Mario Draghi has no room to back down."

"Economists surveyed by Bloomberg unanimously predict the European Central Bank will boost stimulus again this week."

Things could get interesting. Europe is green in anticipation.

Draghi basically backed down and things got interesting.

EUR ripped over 2%, DAX down 3%. And the most surreal stuff flowed from his lips, such as: "We are doing more because it works!"

Honest, the sky is pink with little purple polka dots.

Draghi also cited the effects of deflation as evidence of success of the asset purchase program thus far. Negative interest rates are evidence of total and complete policy failure, and the dearth of borrowing.

Draghi used the word "sizable" to describe downside risks. When deflation is the problem, that's an understatement.

Who knows what it all means. Perhaps as more and more people dare to realize that central banks might not be in control as much as has been thought, volatility is what will manifest.

Perhaps the most ominous mover in FX today is CHF -- Swiss safe haven flows are a-flowing. It's notably stronger.

The action this morning in treasuries (a resumption of the trend toward inversion) should terrify Draghi, Carney, Kuroda, and Yellen and any other Keynesian at the spigot.

WTI crude mounting a small rally. NG not.

Gold muted, silver a little less so, but copper reacted the most, shooting higher on the Draghi news. Unsure if it holds.

S&P Outlook:
Futures wild ride has not formed an impulse pattern overnight, so there could be a wild ride higher if the cash index follows the same path.

The 11/24 swing point was not violated in futures and should be respected by cash today. If so, pressure is still to the upside.

Yellen is due on Capitol Hill later this morning. There could be more hijinks.

The wave count over the last few days is junk.

2116.48 higher and 2019.39 lower are what interest me currently. It's getting noisy in between.

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