IIFT Daily Note with Peter Brown

All eyes on the ECB

Posted by:  |  Time: 7:00 am  |  Topic:  |  Comments: 2
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We are going to get a good idea of what the ECB is thinking today. First with the Rate announcement, then with the press conference.

A 1/4% cut is expected. No cut is bad news and a 1/2% shows they have done a u-turn. We can see from the 200 point range on the S&P yesterday ,this market has some life left in it before Christmas. This is a key day. Tomorrow is all about politics and spin but in the end it is only the ECB that can save the Euro. They have to show their hand today.

Expect it to be volatile. Lower interest rates are good for stocks, ultimately means a lower Euro although the first reaction might be a spike higher.

2 Comments

Aiden

December 8, 2011

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Peter, just wondering if you expect a 500 point (or so) movement in the S&P by tomorrow evening, depending on the conclusions of the ECB meeting & EU summit, or is it possible there could be yet another fudge which wouldn’t affect the S&P much?
Aiden

Peter Brown

December 8, 2011

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Hi Aiden,

The important one is the ECB. They can stabilise the market on their own. Politicians can’t do anything without the ECB. So today’s rate decision is key. And the tone of the press conference. No change is very negative. 1/4 is good 1/2 is very good. Expect the S&P to rally on any cut. but to rocket if it is a 1/2. Sell if no rate cut

Peter