Markets are trying to settle down from the recent wild ranges. Stocks have experienced record up and down moves, bonds have been on a huge run (with an air pocket at the auction) and the Yen and the Swiss Franc have lost their minds. The Franc has had over a 9 cent move of late. The first year of Euro-Swiss LIBOR trades over par.
Sarkozy and Merkel are meeting today. The ECB will release details of the recent Italian and Spanish bond buying. The "BB Gun" estimate is 15B Euros. The needed "bazooka" is at least 100B. Sterilizing operations are continuing and large numbers are complicating the ECB actions.
We were seeing anecdotal evidence that the US was clawing forward prior to the recent market chaos. Europe remains our focus over debts, deficits and downgrades here. The elasticity of markets away from fundamentals in a monetary regime holds in upward or falling directions. Massive over-hyped coverage of the anti-stability could damage fragile business ans consumer confidence.
The gyrations show the markets are alive. A catatonic ice age in the name of stability would not be considered a success. The vast majority of the action is agnostic day trading. We find ourselves in the rare position of "optimist." We are concerned by the recent hits in Afghanistan. The 10 year anniversary of 9-11 is weeks away. A "statement" by our attackers with the developed world this weak cannot be ruled out.