ECB's Draghi Calms Markets Again, but Where Is the Growth?

Mario Draghi, President of the European Central Bank
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Mario Draghi, President of the European Central Bank

Central bankers win again, but where is the growth coming from?

European Central Bank President Mario Draghi (who spoke today) and Federal Reserve Chairman Ben Bernanke (who spoke last week) are both doing a good job of flooding the markets with cheap money, which is calming macro fears, but the big issue is: Where is the growth coming from?

(Read More: ECB's Draghi: Gradual Recovery in Second Half of 2013)

No one seems to know. Not German Chancellor Angela Merkel. Not Draghi. Nor Bernanke.

One thing for sure: The Fed and ECB are holding steady.

The economic data are still mixed — the best you can offer is a "slow grind" up. We need business investment, more exports, and healthier consumers. What will get that?

From a business perspective, some deal on the budget will go a long way toward helping confidence and capital spending. For consumers, its adjusting to the tax increases.

(Read More: Confidence Back? Several Retailers Top Sales Forecasts)


1) Bonds starting to slip? The 10-year Treasury note has slipped to its lowest level in nearly a year. I noted yesterday that have been modest outflows from bond exchange-traded funds this year. Not an avalanche and not the "Great Rotation" everyone is expecting, but it is starting to tilt.

Stocks are up, despite a dollar rally? It's happening. Not today, but the trend is up for the dollar; the U.S. dollar index is at a six-month high, rallying even as stocks moved up in February. That can happen when an economy improves. The U.S. is the best growth engine around, even at sub-2 percent gross domestic product. But expect that to change: Growth could easily move north of 2 percent.

2) The euro rallied as the ECB's Draghi said he would hold rates steady. Remember, the euro had weakened in the last couple weeks in anticipation Draghi might cut rates; as soon as he announced rates were being held steady the euro rallied. Economic policy was essentially unchanged, with Drgahi noting that economic weakness had extended into 2013, but expecting a gradual recovery later in the year. He reiterated that the ECB will remain "accommodative."

3) Barclays lowers its first-quarter GDP to 1.6 percent from 1.8 percent as January trade deficit was higher than expected.

4) Dividends: A new milestone. There aren't many choices for investors looking for yield. For one of the few areas to find it — dividends — the news was good last year and is getting better. According to Standard & Poor's, the S&P 500 index indicated annual dividend rate has reached $300 billion for the first time. That is almost 19 percent above the June 2008 level, which was just before the big drop in stocks.

And there's room for paying out even higher dividends. Corporate payouts remain low at 36 percent, compared to the historical 52 percent, and corporate cash is at an all-time high, according to S&P.

5) Stress tests of biggest banks results released today after the close.

By CNBC's Bob Pisani

  • 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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