How unconventional will Draghi get?

Dow Industrials and Transports and the S&P 500 reached new highs Thursday. U.S. stock futures popped ahead of the bell as weekly jobless claims came in lower than expected, suggesting we could have upside to Friday's non-farm payroll report.

Dovish comments from European Central Bank head Mario Draghi also helped.

The euro dropped like a rock and European equities moved up, as Draghi said ECB officials were unanimous in their position that they would use more stimulus if conditions on the continent call for it. Draghi said the ECB is committed to expanding its balance sheet and to continuing to use unconventional methods.

The question is how "unconventional" Draghi is willing to be. What's in his bag of tricks that will not cause blow back from the Germans?

Read MoreDraghi hints on further ECB action; Stocks rise

The ECB is already rolling out asset-backed security purchases this month. It also has the Long-Term Refinancing Operation, which essentially gives money to banks at dirt cheap rates. It started that program up again in September, but the take-up was very weak. Banks only took out 86 billion euros worth of loans, versus expectations of 150 to 250 billion euros.

What happened? The banks don't seem eager to take the money because they can't just sit on it. They are required to lend it out, specifically to small and medium-sized companies. But lending to these SMEs is considered high risk, so the banks said, "Sorry, pass."

Could Draghi get even more unconventional than asset purchases? Could he start buying corporate bonds? Sovereign debt? The market believes he will eventually do that, but he will almost certainly be challenged for exceeding the ECB's legal mandate.

Read MoreBen Bernanke: Quantitative easing will be difficult for the ECB

But that's what he would need to do—buy sovereign debt—to really make a difference.


1) High food costs are an issue. Don't talk about lack of inflation in the food business. Many companies are reporting this is an issue.

Today, Wendy's reported earnings below expectations, hurt in part by a larger-than-expected increase in beef costs.

Last night Noodle's reported that restaurant margins decreased due to an increase in food costs.

On Monday, food distributor Sysco also cited "acute inflationary pressures" as an issue.

2) A big shale player says oil prices will recover. Continental Resources reported in-line results, and the company's commentary was very illuminating: "We view the recent downdraft in oil prices as unsustainable given the lack of fundamental change in supply and demand. Accordingly, we have elected to monetize nearly all of our outstanding oil hedges, allowing us to fully participate in what we anticipate will be an oil price recovery."

Read MoreOPEC cuts oil price forecasts as 'price war' bites

That's an unusual comment. They are maintaining current production levels but are planning to add fewer rigs in 2015, so their 2015 capital expenditures budget will be a bit lower, but they are still planning on production growth of 23 to 29 percent.

Separately, Concho Resources, which is big in Texas's Permian basin, said it would "recalibrate our capital program and activity level if conditions warrant," while noting that 2015 production levels should increase 28 to 32 percent, with capital expenditures still strong at $3 billion, compared with previous guidance of $2.9 billion.

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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