So what was the market telling us yesterday? Was it the reassurance from the Fed that it will be there if the economic momentum dissipates or was it the stellar earnings report from Apple that allowed the market to free itself from its fears?
Maybe both, but the fear is still tucked away, waiting until the boogey man jumps out, and the next boogey man is Spain, and the thing about Spain today is the earnings report from Santander, the largest bank in Spain, and the issue is whether the market believes Santander has enough capital on hand to withstand a financial shock.
Spanish bank Santander on Thursday reported a 24 percent drop in first quarter net profit after it took 3.1 billion euros ($4.1 billion)in provisions against non-performing loans.
The earnings report is not a pretty one, so we will see how the market takes it, whether the market sees this as related to the overall financial issues of Spain or it doesn’t, but in the meantime, the battered Asian markets liked what Chairman Bernanke had to say and, more importantly, the continued strong showing of US companies.
Asian shares rose on Thursday, retaining positive momentum as the Federal Reserve reassured markets it would keep its very accommodative stance to support growth, while optimism grew over strong quarterly corporate earnings.
The market is getting close to settling down. Europe will continue moving toward resolution, and even though any resolution is years in the making, reassuring the market with steps in the right direction is slow but constant. It’s all about confidence, both from the investor side and the business/consumer side. The confidence is inching back on the business/consumer side; it is the investor that still needs reassuring that Spain is not the next domino in a game of falling countries.
Trade in the day; invest in your life …
