Now that we have had a day to digest the move from yesterday, we go to the only voice in the market worth listening to, that of Art Cashin. Not surprisingly, he doesn' tell us anything we did not already report or know, but good to hear the confirmation nonetheless.
As an added bonus, for the bored history buffs out there, Art shares the following history lesson on the end of Rasputin.The Euro Hits An Air-Pocket, Sinking Stocks And Crushing Commodities - Yesterday was quite interesting, especially a two hour slice in the early morning.
Around 5:30 (EST), Italy auctioned off about 9 billion Euros in six month notes. The rate was 3.25%, less than half of the 6.50% rate they had to pay on November 25th. Seemed like a good deal and markets seemed to relax and exhale. Things stayed stable and quiet until about 9:00 (EST).
At 9:00, the Euro was unchanged against the dollar as it had been most of the morning, and U.S. futures looked to open up a little. Then, suddenly the Euro began to fall and stock futures sank. By the 9:30 opening, the Euro was down nearly half a percent, and weakening by the minute.
There was some buzz about what was suddenly hurting the Euro. I shot out this email to several friends:
Euro air-pocket may have come from news that ECB balance sheet expanded sharply. That hints they are printing money and unable to sterilize. Currency markets calming now. Equity run rate on par with yesterday.
The ECB had announced that its balance sheet had expanded by 10% in one week. If it kept expanding rapidly, it could double its size in less than a year. That threatened possible inflation and a weakening Euro.
Some pundits claimed the Euro weakness was a reaction to a divergence in the Italian bond market. The sharp drop in yields in the six month paper never moved the yield on the ten year which hung around 7%.
A few others pointed to the record number of Euros that the banks were parking in the ECB overnight. We had pointed that out in Wednesday’s Comments.
We suspect that all three items had some influence in the Euro’s fall, but I feel the balance sheet was probably 70% of the influence.
At any rate, the Euro continued to weaken throughout the morning, pushing stocks lower and crushing some commodities.
By day’s end, the S&P had fallen back into negative territory for the year. The Dow fell almost 140 points. Gold fell the equivalent of 245 Dow points as did oil. Platinum plunged the equivalent of 393 Dow points while silver imploded to the tune of 640 Dow points. The damage was widespread and rather ugly.
On this day (+1) in 1916, one of history's most celebrated but inept
assassinations began. In the retelling of most assassinations we hear
how the victims might have been spared if....! You know the drill - if
the guy guarding Lincoln's box had not gone for a drink or if the
Archduke Franz Ferdinand had not had his car forced up a side street,
etc. etc.
But this assassination was more like Larry, Moe and Curly plan the Normandy Invasion.
The proposed victim was a semi-literate preacher who passed himself off as a Russian monk. Pre-dating some TV preachers, in an age with no TV, he preached that you needed God's forgiveness. And, to give God a wide enough target, it is necessary that you sin a lot. So, many of his convocations turned into what we might secularly call today - drunkfests or orgies. (But, he said God does need a large target.) Critics of the preacher called him "The Mad Monk". He called himself "Rasputin".
Anyway, Rasputin hit pay-dirt when he appeared to cure the hemophiliac son of Czar Nicholas II. Viewing the cure as a miracle, the Czarina demanded that all decisions be cleared with the miracle-maker, Rasputin. That made him the most powerful man in Russia which did not sit well with the nobles. Thus the assassination attempt.
On this night Prince Yussupov, the Czar's nephew-in-law, invited Rasputin over for some late-night cakes and wine. Yussupov and his pals loaded the cakes and wine with enough cyanide to kill a regiment of Cossacks. And just for insurance they put extra cyanide on the knives, forks, plates and glasses. Then Yussupov sat down and made small talk with Rasputin. Over several hours Rasputin ate most of the cakes and drank all of the wine. Then he asked the prince if he had any more wine.
In a panic, Yussupov ran upstairs where the co-conspirators gave him a gun and told him to shoot Rasputin. He shot him in the back at close range. Rasputin tried to turn but fell backward. A doctor was called in and pronounced the monk dead, saying the bullet had pierced his heart. An hour later the conspirators returned to move the body.
In a scene straight out of a Stephen King movie, as Yussupov bent over the body, the monk opened one eye and grabbed the Prince by the throat and started to beat the hell out of him. The others freed the Prince and the conspirators fled, locking the door behind them. Rasputin kicked down the door and chased them onto the palace grounds. They turned and shot him twice knocking him to the ground. Then using iron bars they beat his head to a bloody pulp. They then tied his hands and feet, cut a hole in the ice and dumped him in the River Neva. When the body was found, it was noted that he had freed his feet and one hand and, if he hadn't drowned, he might have come back one more time.
Peasants believe Rasputin put a curse on Russia which caused the revolution in 1918 and may had caused some recent problems (more wine, Mr. Putin?).
Traders thought the stock market was cursed yesterday - not by Rasputin but rather by the Euro.
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