This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Europe Could Create a Sell-the-News Wave

NEW YORK ( TheStreet) -- This week promises to bring a crescendo to the long-expected eurozone actions. The suspense has been building up for about a month, hard to miss unless you had been on vacation the whole time.

European Central Bank President Mario Draghi is expected to at least give some concrete guidance as to what the action may or may not be on Thursday, though undoubtedly most of the details would need to be worked out later. It is expected to include buying eurozone sovereign bonds of three years or shorter, as reported by Bloomberg. And, I wouldn't be surprised if they also decide to lower the 0.75% rate, given the recent dismal PMI numbers (all over the world, but especially eurozone and China).

Such is the baseline expectation; anything more would be a risk-on surprise and anything less a risk-off kick in the head. As all risks today have become policy risks everywhere, risk-neutral is an impossibility. Governments around the world have literally driven the market into schizophrenia.

But things are more complicated than this, as everything in eurozone. While German Chancellor Angela Merkel has adopted a more accommodative posture toward ECB lately, the split in her government has boiled to the surface. Bundersbank chief Jens Weidmann apparently got a boost, after rumor surfaced last week about his resignation following his public opposition to the bond-buying idea, when the economy minister Philipp Roesler publically joined him, as reported by Reuters.

So, even if Merkel could "muddle through," to paraphrase her recent speech, the Draghi announcement, we can expect much resistance from Germans as they get down to pesky little details such as how much, what to buy, how to set up the triggers, who is to say whether such actions constitute "financing states", where the money will come from, etc., etc.

In the meanwhile, Spain is still bluffing, holding off the application for rescue until the very last minute. It has become increasingly clear that rescuees have nothing to lose by standing firm or ignoring deadline after solemnly drawn deadline, essentially hijacking euro as a bargaining chip. But it's a risky gamble.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.28 1.80%
FB $117.60 -0.82%
GOOG $694.99 -0.46%
TSLA $235.50 -2.60%
YHOO $36.13 -1.10%


Chart of I:DJI
DOW 17,757.07 -134.09 -0.75%
S&P 500 2,065.78 -15.65 -0.75%
NASDAQ 4,780.6210 -36.9730 -0.77%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs