Originally posted at Briefing.com
If anyone doesn't think global equity markets are fixated on central bank action, think again. On Thursday, the Shanghai Composite increased 4.3% (4.3%!), driven mostly by the hope that some new stimulus action will soon be announced by the People's Bank of China. An equivalent gain for the Dow Jones Industrial Average would be 770 points.
That's not in the cards today (at least we don't think it is), yet it isn't inconceivable for 18,000 (and Professor Jeremy Siegel) to enter the picture sometime soon.
It remains to be seen how things play out at home, particularly since the manner in which ECB President Draghi handles his press conference will be viewed as a dictating factor in the trading action.
The S&P futures are currently trading about four points below fair value.
Mr. Draghi's press conference is underway now and it follows the ECB decision to leave its main refinancing rate unchanged at 0.05%. The marginal lending facility and deposit facility rates were also unchanged at 0.30% and -0.20%, respectively.
On a related note, the Bank of England also left its key lending rate unchanged at 0.50%.
The interest rate decisions by the ECB and Bank of England were both expected. What inquiring minds want to know is whether Mr. Draghi is still going to talk tough about the potential for a QE program.
[Read: Everything You Wanted to Know About the ECB’s Latest Monetary Policy (But Were Afraid to Ask)]
His jawboning to that effect has helped drive the euro to a 27-month low against the dollar; meanwhile, the Bank of Japan's actual QE program has helped drive the yen to a 7-year low against the dollar.
That has all compounded the recent selling activity in dollar-denominated commodities like oil, which is trading below $67.00/bbl in early action.
A few things noted thus far by Mr. Draghi are that staff projections for GDP and inflation have been lowered for 2015 and 2016 and that the ECB will reassess the economic situation in the eurozone in early 2015. The early sense is that QE in the eurozone will continue to wait.
Separately, a number of retailers, including Guess? (GES), Aeropostale (ARO), Express (EXPR), Kroger (KR), and Dollar General (DG), have reported their quarterly earnings results. They are mixed at best and the guidance has been generally weak. Meanwhile, UBS cut its rating on Wal-Mart (WMT) to Neutral from Buy.
The latest initial claims report, though, was not weak. It was pretty much in-line with expectations as initial claims for the week ending November 29 dropped to 297,000 (Briefing.com consensus 295,000) from 314,000 in the prior week.
Continuing claims for the week ending November 22 increased by 39,000 to 2.362 million (Briefing.com consensus 2.343 million).
The claims data should be well received, yet they will get glossed over knowing the November employment report is going to be released on Friday.
Finally, Disney (DIS) announced that its Board of Directors approved a whopping 34% increase in the company's annual cash dividend to $1.15 per share. Not that it would matter much to the broader market, which only seems concerned about whether central banks are lowering or raising policy rates, yet that's a very nice income hike to say the least for Disney shareholders.
