Much of the expected ECB's move on Thursday should they, as anticipated, cut rates has been in the market for a while now and may have been already discounted.
True, these people move slower than those melting glaciers global warming freaks spend so much time fretting about. But one surprise most have not mentioned much is if the market just yawns. An initial reaction followed by a quick return to the new, boring, low volatility normal is quite possible.
While it might be good for bond holders, it'll hardly help ease the dissension in a Union that more and more appears to be held together by string, some spit and ceiling wax. Make no mistake there's no love lost between the Union's two biggest players, France and Germany. Nor is there any between those peripheries and bureaucratic-laden Brussels.
A change in rates is expected to drive the dollar higher and hopefully make EU products cheaper. But those austerity-crazed German will most likely reap most the the benefits if there are any. So far the ECB has been the luckiest of central banks caught in this bind accomplishing more by just jawboning than the other central banks.
But cheap talk after the vote last weekend will hardly carry the day now. On this side of the Atlantic you have a Fed that, according to MSM, is becoming increasingly concerned about a so-called complacency it did it's utmost to create.
The risk premium on corporate versus U.S. government bonds hovers around one percent, a low last seen in 2007. In short, the narrower the spread the less risk-averse bond buyers are. And if the VIX, a so-called volatility benchmark many investors track, gets any calmer, it'll soon resemble Coleridge's painted ship on a painted ocean.
So tomorrow when morning becomes Thursday, investors may get some answers. But don't bet your grubstake on it. The EU is a badly cracked and flawed-thrown-together dream that with a bit of help from its so-called friends could easily turn into the Continent's worst nightmare since WWI.
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