On a day with big point gains in the indexes, and a rally in European stocks, and the euro strong and the dollar weak, you would think you would see big gains in industrials and materials — the big global names.
But look at the market leadership: telecom, consumer staples, utilities. Materials are the market laggards.
Hardly inspiring tape action.
Another point: materials and industrials are among the most heavily shorted names out there, so you can't really call this a short-covering rally.
Why is this happening? Because no amount of central bank posturing over monetary policy is going to change the economic fundamentals.
Big global economic companies — the Caterpillars and the United Technologieses of the world...will move decisively when there is better macroeconomic news, not on central bank posturing.
Mr. Draghi has implied he will do anything to save the euro.
I have no doubt this is true. I also believe he is not even close to exhausting the arrows in his quiver.
The problem is this: the market does not believe that the ECB by itself will save Europe, just like it does not believe the Fed by itself will save the U.S. economy.
The market does not have a lot of faith that Italy or Spain will be able to implement the structural reforms needed to truly turn their economies around. It also does not have a lot of faith that the EU will be able to collectively implement the closer fiscal ties that will be necessary to make coordinated action on the EU economy effective.
And the market has no faith at all that Greece will be able to do...anything.
And a growing number of traders believe the euro is part of the problem, not part of the solution.
Against this backdrop, with very little in the way of positive macroeconomic news, it's little wonder that telecom and utilities are among the market leaders today.
I am not knocking Draghi: he is buying time for the euro-zone. That, in itself, is important. The immediate problem facing the euro-zone is this: negative GDP, with 7 percent interest rates. That is slow death. Draghi needs to address this. He is doing so.
But even getting rates down does not address the long-term structural problems.
By the way: many are saying Draghi has said nothing new. Really? So S&P futures moved 18 points at 6am ET on nothing? Hm.
Seems to me Draghi has opened a somewhat new chapter in expanding the ECB's mandate: addressing high yields on sovereign debt is within the ECB mandate. I will do something about it. Somebody thinks that's significant.
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