Wednesday, February 29, 2012
Stock Market Commentary:
ECB’s LTRO 2 and Q4 2011 GDP Top Estimates:
Stocks opened higher on Wednesday after the Q4 GDP and the ECB’s second LTRO program topped estimates. 800 European banks borrowed 529.5 billion euros ($713 billion) which topped the Street’s estimate of 500 billion euros. In the U.S., the latest Q4 GDP estimate rose to 3% from the initial estimate of 2.8%. This was the largest gain since the second quarter of 2010 and beat Q3’s 1.8% reading. Bernanke testified on Capital Hill and largely reiterated his recent stance regarding the ongoing economic recovery (with downside risk) and inflation remains in largely inline with his forecasts. Elsewhere, gold and silver both got smacked which bodes poorly for other risk-on assets.
Market Outlook- Confirmed Rally
Risk assets (stocks, FX, and commodities) have been acting better since the latter half of December and are extended by any normal measure. At this point, all this means is that the odds for a pullback increase. However, markets can very easily go from overbought to extremely overbought so trade accordingly. As always, keep your losses small and never argue with the tape. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!