On the Trading of Thursday, January 22, 2015
Invisibilia manus!
“The Invisible Hand!”
Today was a great day for equities, as I suspected and as was rumored, Mario Draghi (at noon in Germany), the President of the ECB, decided to make an announcement regarding the European version of QE, a similar program to QE (quantitative easing) was recently completed in the USA. He announced that he’d have the ECB spend 60 billion euro (rumors of 50 billion were floating around) per month through at least 2016, buying ECB bonds. He said no definite ending date for the stimulus program of buying Euro Central Bank fixed income was to be declared. This is believed to stimulate the economy. Consequently, the markets reacted quite nicely in the U.S. (and elsewhere) to the announcement, despite it being widely expected. The euro currency vs. the U.S. Dollar declined nearly 2%, as of roughly 2amCT the euro traded at 1.1350 vs. the Dollar.
The DJIA finished up +259.70 points or +1.48% to 17,813.98. The S&P500 finished up +31.03 points, or +1.53% to 2,063.15. The S&PMidCap400 finished up +26.57 points, or +1.85% to 1,462.29. These major U.S. stock indices are just 1.60%, 1.45%, and 1.08% respectively off their all time highs. If I had to take a wild guess they’ll soon plow through these previous all time highs, to strike new highs, before taking a few steps backwards, before making another advance to higher levels.
Oil finished up yesterday, and is currently at approximately 47.07 per barrel. Treasury Securities traded mostly down, longer term maturities down about point five percent, and intermediates down about point three percent, inflation linked intermediates were mostly unchanged, up about zero point zero three percent. The VIX plunged, continuing it’s rapid descent, which I like to describe as a mini implosion (whenever it happens, as volatility is very volatile itself). The VIX declined -13.00% or 2.40 points, to 16.40.
In other news yesterday, Wednesday, the S&P500’s current yield reached a level that exceeds the 10 year treasury note yield, for the first time in quite a while. This is a very bullish indicator for equities going out approximately a year.
As of approximately 2:00am S&P Futures vs. Fair Value are indicating an implied open of relatively unchanged for the U.S. major stock indices; +2 points for the DJIA, and -0.30 points for the S&P500.
That’s all the news that’s fit to print.
By Andrew G. Bernhardt
Bernhardt Capital Management LLC 