Stocks surged early Monday on renewed hopes for yet another new solution to Europe’s sovereign debt crisis.
Following huge gains for Europe’s major bourses, the Dow was recently up more-than 300 points while the SP 500 was up 3.2%. The euro rallied sharply vs. the dollar, putting upward pressure on commodities like gold and oil and other so-called risk assets while Treasury prices fell.
In addition to a strong start to the U.S. holiday shopping season, several items contributed to the early euphoria, including:
- Rumors, since denied, of an IMF bailout for Italy.
- New guidelines, to be discussed at a meeting of finance ministers later this week, allowing the European Financial Stability Fund to insure up to 30% of debt offerings by struggling nations.
- Weekend comments by German Finance Minister Wolfgang Schaeuble urging fast-track treaty changes to tighten budget discipline and fiscal unity among EU members.
- Rising expectations the Fed will embark on another round of quantitative easing, focused on buying mortgage-backed securities, as part of a global effort by central bankers to ease policy.
Henry and I discussed these and related issues with John Mauldin, president of Millennium Wave Investments and author of (most recently) Endgame: The End of the Debt Supercycle and Read More from the Article Source: Full Article
