It is about to set sail. The ECB QE ship. Fund managers are scrambling to grab a seat on the cruise ship. It will be quite a ride. Europe is much more important than China for the US market. A China property crash has repercussions, but a European deflationary spiral is a much bigger concern for financial markets. Europe is decaying but still a hugely important hub of finance, not the US. There is more financial transaction volume in Europe than America.
An ECB QE is widely expected, but much like QE 2 in the U.S., it will provide a short term boost lasting at least a couple of months which will be a market grace period for Draghi.
I am uneasy and uncertain about this market. There are conflicting forces, at work, the longer term force of overvaluation and saturation, and the shorter term forces of ECB QE and money managers scrambling for beta. Also we are 50 points above late Thursday overnight lows, so it is difficult to expect a big rally from here, but at the same time, 60 points below all time highs. Stuck in the middle. I will wait.
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