ECB's president's spell on last week had sent stocks soaring on Friday. With the Dow scored another rally, the odds for JCI to launch another rally is looking pretty good today.
However, we must not forget that Draghi's words are still have to be put into reality. How far will the ECB go to defend the euro?
ECB's meeting this week will be put under the microscope as the market will look for fresh clues which could back up Draghi's statement last week. Elsewhere, the Federal Reserve will also deliver its policy decision this week. Will the Fed provide fresh clues over what it would do next? Or will the Fed simply repeat the same thing over and over again?
The market's impatience could bump to its ceiling this week should both central banks fail to deliver fresh policy clues. Such impatience could potentially unwind the recent gains and who knows, probably would send the Dow and JCI below its recent lows as disappointments set in. Also, I'm not sure that the ECB will buy bonds indefinitely. Whose money will the ECB use? What happens when the ECB runs out of cash?
How do we know that the woes are returning? We could see that from the yields on Spanish bonds, and Italian too. Last week these yields were soaring until Draghi shot them down.
Nevertheless, for now the stocks are expected to follow up the last week's rally, at least until ahead the central banks' meetings. After rising 1.32% on Friday, the portfolio is still expected to carve up some more gains. BMTR is the closest to light while the rest of the portfolio remains precarious - yet hopeful.
Written by Unknown
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