Checking through the headlines overnight, here is a quick run through of what I see:
- German Constitutional Court Allows Ratification of European Bailout Fund
- Consensus Expects FOMC to Announce QE3 Tomorrow
- Apple to Unveil iPhone 5 at Noon Today
- Facebook Will Be Building Its Own Search Engine
- Texas Instruments Affirms Top-End of Guidance
All positive headlines. Stock markets in the U.S. are at 4 year highs. Many investors have finally jumped on board the rally, rooting for higher prices. And the news is good. Europe has been convincingly saved. The U.S. will sort out its problems through more Fed stimulus. The Chinese infrastructure spigot has been turned on again.
It was only 3 months ago that the stock market was discounting a much different scenario. No doubt much has changed in the past 3 months. But it is worthwhile to remind ourselves that the stock market’s discounting mechanism could see the world much differently again 3 months from today.
- Dollar weakness has been the story of the past 2 weeks, with the Euro now close to unchanged on the year (1.2950 is the unchanged level, Euro now trading 1.2925). AUD, GBP, and CAD are within a few percent of highs on the year vs. the dollar as well
- Asia opened and closed strongly in the green after yesterday’s strength in Europe and the U.S. European shares rallied after the German court decision was released, up between 0.5-1%. SPX futures are indicated up 0.4%, and AAPL up 1% ahead of the noon announcement
- Commodities are showing particular strength on the dollar weakness, with gold, silver and copper making new local highs
- FOMC decision will be released tomorrow, with a Bernanke press conference to follow