Don't look now, but Europe is rallying
Germany is in a flat-out bull run, and France and Italy are also up.
The rally that wasn't continues, and it continues with breathtaking power. I am talking about the rally in European stocks, a rally signaling that the ECB solution -- temporary or otherwise -- to come to grips with the near collapse of many countries and most banks in the eurozone.
With the increase of 22% in the German Bourse, you have to admit they are having a flat-out bull market. Germany is red hot, and you've got an out-of-bonds-into-stocks virtuous thing going on over there that's pretty spectacular.
France continues to rally with tremendous conviction and is now up about the same amount as our S&P 500 -- not bad, given that many analysts had bet that one, if not all three, major French banks would have a Lehman-like event.
But here's one not to be believed: Italy is up 7%. Isn't Italy bankrupt? Shouldn't we be shorting the heck out of everything Italy? Isn't it Greece?
Not if your stock market is up 7%. There you have the oddity of money going into both bonds and stocks, although I'm sure most people think that the Italian bond market, the third-largest in the world, is one big phony.
I'm no longer sure.
Finally there's a market that, while not in the black, continues to run wild with a virtual Pamplona stampede: Spain.
Spain is down 7% for the year, but you have had monster gains in individual stocks, and that's what I want to focus on for one moment.
I have shouted to the rooftops that the key to this crisis is Banco Santander. Why? Because it is big enough, especially relative to its mother country, and leveraged enough, especially considering the United States in 2008, to be Lehman Bros. It can't be allowed to fail. In fact, it has to prosper, because the hope is that one bank, or maybe two with BBVA, can be used to save the Spanish banking system. Given that Santander also has a huge number of government bonds, it is the perfect microcosm for the problem.
Now, here's what's happening. SAN has had a gigantic and sustained move from $4.88 to $7.50.That's a sign that the bank is coming back to life, courtesy of IPOs from some of its worldwide empire -- only 20% of its business is Spain -- but also because of the ECB's bond-buying program.
Santander has already issued debt to help its balance sheet at very successful prices. But you have to understand that it will be able to raise a huge amount of equity if it wants to in a deal that everyone will want to play in if we know that deposits in SAN are going to be guaranteed in euros.
Wait, Jim, wouldn't that mean that every bank would have to issue the same guarantee, putting the government on the hook for all of it?
No, not if you forced all the other banks into mergers with SAN and BBVA. Hey, why not just have two banks in Spain. Britain and France don't have all of that many.
I know, farfetched. But I am using it only as an example, an example of what can happen when equity markets go up. You can issue equity, and people actually want it!
That's about where we are.
That's what's about to happen.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.
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How about we ship Jim over to Europe and replace him with a hot french chick.
yes crane the pump and dump master is now pumping and then dumping Europe
look Europe is bankrupt and they are going to be writting hot checks that will bounce to pay their debt.
Gee people with the USA , Japan and now Europe caught in the debt trap with no way out but to continue to write hot checks western the economic system is going to collapse and soon.
This is the largest asset bubble of all time and it is not going to end well.
2009 65.7 65.8 65.6 65.6 65.7 65.7 65.5 65.4 65.1 65.0 65.0 64.6
2010 64.8 64.9 64.9 65.1 64.9 64.6 64.6 64.7 64.6 64.4 64.5 64.3
2011 64.2 64.2 64.2 64.2 64.2 64.1 64.0 64.1 64.1 64.1 64.0 64.0
2012 63.7 63.9 63.8 63.6 63.8 63.8 63.7 63.5
Labor participation rate now stands at an all time low since the administration took office, and all the media tells us Americans are getting back to work. What a bunch of lies and deception we are being fed every day. Europe is high on the stimulous fumes and nothing is fixed. Just more of the same, redistribution of assets, currency devaluation, pumping of markets, and no sound fundimentals, just more smoke and mirrors. The higher the house of cards goes, the farther it has to fall. Resembles the great depression, only this time it's on a world scale.
Uhhhh, just because Europe is taking notes from BB and the FED, it does not mean that anything is fixed. More speculative froth brought about by the prospect of devalued currency. If you are not invested, you will lose due to inflation. If you are invested for a second too long, you will lose due to the inevitable "POP". Speculators always think they are smarter than everyone else anyway so let them enjoy their "rally". Alot of them will make some money. Just as many will lose money.
These ECB actions are life support for a dying patient. They just hope they can keep him alive until a cure is found. Right now the only known cure is amputation and they aren't ready for that just yet. Give them a few months.
It's called betting on the Central Bank to debase the currency Cramer. There is no real growth in the EU economy to justify those gains. Even you won't blow smoke up people's backside on that statement.
I'm not knocking the upswing, hell I did the same thing with my 401k. I bet Europe would break before the FED in the US and debase. But I've got no illusion that this is 'growth' or 'investing'.
Listen to Cramer and put all of your money in the market and watch him and the other big marketers take your money !
They run the prices up to get you buying and you think you will make money, BUT!, then they will sell out from under you and take your investments. Its happened time and again and they keep doing it as long as they can keep you investing so they can manipulate the market and then sell and make BIG,BIG BUCKS!
So watch out for the big burst in the market!
Thanks for the thumbs down , so I know that you are out there getting ready to do it to the investors!
we have tried to force our capitalism on the germans but here are the facts:
their education system is number 1 in the world
workers there make 20% more than workers in the usa
workers there have health care even when they are unemployed
ceo's there make 40 times what a worker makes
ceo's in the usa make............460 TIMES WHAT A WORKER MAKES
but make no mistake.....usa capitalist pressure forcing open borders and union busting is
slowly dragging germany down to us
I wouldn't make a prediction about the next six months in the markets. I haven't a clue, but it's going to be unpredictable. Any additional asset purchases I make will be companies doing business only in America like GAIN and PNW. Europe is just too wackadoodle to make a call on.
Labor market participation traditionally peaks between ages 25 and 54. At those ages, roughly 80 percent or more of people are working or looking for work. At younger or older ages, though, the percentage drops — tapering off to fewer than 10 percent of people 75 or older, as the graph shows.
The graph also shows changes in labor force participation since 2006 within narrow age groups. While participation has dropped among young adults, it has held pretty steady for those aged 25 and up and has actually increased at the oldest ages. But the sheer number of baby boomers (the generation born between 1946 and 1964) moving into their retirement years has dampened the overall rate, as CBO confirms. Researchers at the Chicago Fed and theKansa City Fed bear out CBO’s analysis.
Graph http:// galesburgplant . com / posts / 17977
workers spend money before it is earned
rich spend money on tax accountants to tell them how many houses thay have....
don't forget that john mccain didn't know the answer when asked how many houses he owned
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