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Stocks Surge as Central Banks Intervene, Jobs Data Heats Up (XLU, XLF)

November 30th, 2011

No matter what your perspective is there’s no denying we are in the midst of a strong broad-based stock rally fueled by two major events; one intentional, the other organic.

On the intentional interventionist front, the coordinated effort by the Federal Reserve and 6 other central banks to boost liquidity by lowering the so-called ”swap rates” had an immediate positive impact on global markets. The fact that it followed a (supposedly) separate easing move announced by China overnight that lowered the reserve requirement for banks to 21% from 21.5% only intensified the intended impact.

“We got what I believe was a coordinated action by the Chinese…and then got this dramatic news coordinated between the Fed and the ECB,” says Donald Selkin, chief market strategist at National Securities in the attached video clip. Add in a clear trend of improving economic data, including this morning’s surprisingly strong ADP Private payrolls report at 206,000, and Selkin says we can easily push 2011 back in to the win column.


Prior to today’s news, traders were already showing an increased appetite for risk-taking this week, the only exception being the Financial sector (NYSEArca:XLF) was headed towards a fresh 2-year low. The fact the banks are rebounding only hours after Standard & Poor’s cut the credit ratings on 15 global banks has not gone unnoticed.

See the full “Breakout” interview below:


NYSE:XLF, NYSE:XLU


 

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