Passing the Baton

This week it was Europe’s turn to throw some gasoline on the fire. Draghi announced the ECB has lowered the key interest rate by 0.25% to 0.50%. The fire started Thursday and kept on burning Friday. The U.S. employment numbers released on Friday were less than stellar, but perhaps that was just what the doctor ordered. Perhaps “investors” felt that this would be just the right amount of progress and woe to keep the FOMC flooding the financial markets with digital dollars.

Markets in China and Japan were closed Monday. The remaining markets in the Far East closed up 0.8%. Stocks rose in Europe 0.5% and in the U.S. 0.8% on low volume. I suppose this is in hope of more soft talk from the FOMC later this week. The momentum from the West continued into Asia Tuesday with stocks gaining 0.8%. Markets in China remain closed until Thursday. In Europe, stocks declined slightly. In the U.S. stocks rose 0.3% on moderate volume. From the frothy stock file, despite a bad earnings report, IBM again rose above the $200 per share mark while Facebook closed in on $28 per share.

For the month, stocks rose another 2% setting records with each marginal new high. In contrast, despite significant recovery, precious metals plummeted 11% in April.

Wednesday. stocks in Asia and Europe pulled back 0.4%. In the U.S. they dropped 1.1% on low volume after the FOMC announced no change to their plans. The VXO fear index ramped up 10% to close at 13.79. Precious metals resumed their slide, falling 2.5% while oil dropped 2.7%. IBM again dropped below  the $200 mark. Thursday stocks dropped in Asia 0.4% and rose 0.5% in Europe. In the U.S. stocks rallied 0.7% on low volume as the risk-on euphoria presses stocks to even more insane heights. The VXO dropped 6.5% to close at 12.89.

Friday, Asian stocks closed down 0.3%, but in Europe and the U.S. they closed up 1% on low volume. The VXO slid 5.7% to close at 12.16. IBM closed the week at $204.51 per share. The S&P 500 Index rose 2% for the week, setting a record close of 1614.

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