When the market is "thin" (light volume, few players), any piece of news can sway the direction of stocks. That's one of the reasons we have seen the crazy volatility lately. Another is the presence of a lot of electronic/algorithmic trading. The "algo" boys don't care about up or down. They care about catching very short-term trends. If things tilt up they buy. If things tilt down they sell. On Tuesday we got some welcome news that tilted things up.
BHP Billiton (I liked the old name, Broken Hill Proprietary, a lot more: sounds ruggedly Australian) bid a zillion dollars for Potash (POT-rated Hold by Soleil/Gulley Associates). Potash said they needed a zillion plus, which is the right answer, so the game has begun. Other companies in the potash business went up accordingly, and the market celebrated with good cheer. Big hostile takeover bids tend to do that.
Europe has very recently caused indigestion, so successful bond offerings in Ireland and Spain helped improve the mood. Word came from Japan that they were thinking of a new round of stimulus, and some pointed to this as well. If Japan does inject more stimulus it will be as successful as the many, many stimulus programs they have tried for 15 years. That is, it will fall flat. I can't believe anyone would treat this as news even worth reporting, but when you're looking for straws in the wind, anything will do. There was also a story (unconfirmed) that the Fed will launch a $1 trillion Quantitative Easing program soon. I wouldn't put any faith into that rumor, but the market seemed to like it. Buying a trillion of something would force rates down a bit more, but they are already low. Growing loan demand needs availability of money, but it also needs demand for money and as we have written before, the level of uncertainty is such that I don't think demand will be revived overnight.