Earnings season is almost half over.  Generally, the earnings reports have been slightly better-than-expected.  Normally, when  a company’s quarterly earnings disappoint, that stock gets hurt, but that doesn’t drive the overall market down a hundred points.  Yet, the market remains painfully volatile.  Something else is causing that!

Yesterday, economics actually mattered briefly, when the “Beige Book” report was released at 2 o’clock.  The economic report showed the economy had slowed down, and the Dow immediately followed it down.

Sarkozy nearly missed the birth of his child to fly to Frankfurt for an emergency meeting, which means it must have been a very important meeting indeed.  The early morning rumor is that the European Financial Stability Fund can buy sovereign bonds of the “good” European governments, who have kept their deficit cutting commitment.  That caused the European markets to rally strongly.  Futures now indicate the Dow will open up about 50 points.

earnings still matter, economics still matters, but Europe is what really matters!