Prepare for a big positive day today as the EU & IMF underwrite a massive Euro stabilization package in an attempt to thwart contagion of the recent run on sovereign debt. As we know, governments can move markets and indeed are responsible for the health of the business environment through manipulation of Monetary and also Fiscal policy. Although the EU acted late in trying to arrange a bail out / emergency financing for Greece, it has now acted very aggressively to support the Euro currency. Expect at least a short term bounce in the world stock markets today. This show of strength should thwart what was starting to look like a 1987 style crash. If it succeeds it should ensure that the recovery from this fall should be swift.
In 1987 the SP-500 fell more than 28% in 3 months, so this move of -8% in 2 weeks is small in comparison. This week will show us if the markets are confident that Europe has done enough to thwart the speculators, and return confidence to the markets.
US Futures are up, most European markets are opening very strong and the MSCI world index rose 1.2% as I go to press. It should be a positive and interesting day. Prepare for big volatility in the coming days and weeks as the market contorts and gyrates itself trying to find sense in these turbulent times.