The Flinchum File

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Missing One Bullet But Not Another

Like a new father getting up for a 3:00 AM bottle feeding, I was up at 2:45 AM.  Instead of heading to the kitchen to warm the bottle, I headed to the kitchen for hot tea, before positioning myself in front of the television and wait for the legal opinion from the special counsel of the European Union Court of Justice on whether the European Central Bank (ECB) could proceed with its quantitative easing (QE) plans for next week.

Of course, self-important lawyers move at their own pace, and the announcement was not made until 3:40 AM.  (Grrrrrrr!)  But, it was good news!  With some conditions, the ECB may proceed with QE!  Dow futures had been indicating a 100 point loss at the open, which then improved to a flat open.  The euro immediately dropped to a six-year low against the dollar, as the market now expects the ECB to flood the world with euros by using QE..

The ECB has faced more obstacles than the U.S. Federal Reserve or Fed.  The primary obstacle is Germany, the home of Austrian economics.  Just as the Republican party wants to impose supply-side economics on the Office of Management & Budget to use at all times and in all economic environments, Germany seeks to impose Austrian economics at all times and in all economic conditions.  Germany lost this morning, and that’s a good thing.

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After a short nap, I was surprised to see Dow futures had moved past the more important uncertainty of QE in Europe and was now focused on the surprisingly poor retail sales in December and on JP Morgan’s disappointing earnings.  More interestingly, the World Bank decreased their estimate of global growth for this year and next year.  Cooper, which is often called “Dr. Cooper” for its ability to predict economic growth, then plunged to a five year low.  All this caused Dow futures to drop 253 points.  So, have a nice day anyway!