MAKING NOTHING OUT OF NOTHING

They all have gone home.  All 27 of them.  The official/non-official consensus was that it was a 1-1 draw.  One might ask, "Hold on then.  A draw?  Who was playing?"  Why Frankie and Angie of course.  Frankie scored first by getting an agreement to have papers drawn by the end of the year on the full integration of regulatory oversight for the Euroland banks but Angie leveled shortly thereafter by getting the assembled to agree to implementation in 2013.  Dapper David explained that all of this was perfectly fine with him but let's face it lads, we probably will not sign on for that one. And on that note, the meeting which had been positively anticipated ended, with nothing whatsoever accomplished except for another agreement to agree.

On style points, I would score it as an Angie win as Frankie, as is his wont, overplayed his hand.  Then again, given his poll numbers he certainly could have benefited from a clear win.  Someone more experienced in these matters than he...who does not exist among his advising circle...could have told him it was a very muddy pitch on which he was playing.  Wins do not come easily or decisively on such grounds.

The markets looked at the result and sold off, not violently but off nonetheless.  Slowly I think, on both sides of the pond, people are beginning to own up to the fact that the ECB put (some call it the Draghi put) is really the only game in town and not simply the first brick in the foundation of a permanent solution (the sell-off in equities over here had more to do with earnings disappointments).  As such this period of calm and rather remarkable performance in Euro equities over the past couple of months is being questioned.  There has been no material change in the economic or fiscal situation of Euroland.  The decline of borrowing rates has been a good thing (Italy astoundingly sold 18 billion of mixed maturities this week)  but unless more positive REAL progress is made we will surely face a new squeeze in the coming months Draghi or not.

And so we go into another week-end but with far less positive outlooks.  And memories of the 1987 crash.  And the U.S. election looming in just 18 days.  When is the next full moon?

Have a good weekend.