This week a few influential countries came up with a chip to “chip in” to the crisis in Europe. The agreement by the Bank of England, our own Fed, the Bank of Canada, the Swiss Bank, the Bank of Japan, and the European Central Bank allows for cheaper loans in dollar terms to stressed Euro banks. While this won’t solve Europe’s underlying problems, it will buy time – and guess what, stocks liked it. The Dow opened the week at 11,231 and closed at 12,019. That’s a move of 7%, somewhat alleviating the last couple weeks’ shellacking.
The Dramamine market isn’t going to stop, so don’t get too happy. Despite solid news from the U.S. in the way of good sales on Black Friday, upward revisions to jobs created, rising sales of completed homes, and a pulse in the manufacturing index, Europe is likely to dominate for months to come. Several European countries must roll over debt beginning in February of 2012 and extending into the Spring. Mopping up uncertainties before then, if finance ministers can manage it, will be helpful.