Traders noted that Draghi has now aligned himself with the other major central banks — the Federal Reserve, the Bank of England, and the Bank of Japan — in cutting rates, in their case to 1.25 percent. But it's a little more than just a moral booster: it also eases funding stresses on European banks.
But, as Michael Darda at MKM Partners has noted, even a series of 25 basis point cuts all the way to zero won't turn the tide sufficiently: "...as experience with Japan and the U.S. has shown, this would be unlikely to put nominal aggregate demand back on solid footing."
That's why many still believe the ECB will eventually be forced into becoming an aggressive buyer of distressed sovereign debt.
What's next: the People's Bank of China, which many expect will soon begin easing credit restrictions after a long period of monetary tightening.
Financial tax dead...hopefully. The U.K.'s David Cameron has said he would not support a financial tax — widely backed in the EU — unless it was instituted at a global level, unlikely to happen since it is also opposed by the U.S. and Canada. European officials are trying to push the tax through because European consumers are taxed out — financial trades are one of the few transactions not taxed.
Risk to upside? For days, the Street is full of talk that hedge funds are notably underperforming the markets, and the "greed trade" — the need to take on higher risk — is a major driver of the markets. This is one of those trader beliefs that is impossible to quantify, but something a lot of people just believe is true — and there may be something of a self-fulfilling prophesy to it.
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