The big pan-European index, the STOXX 600 is now up 20% from its low last year. So it’s officially in “bull market” territory.
This violent move will prompt a fair amount of head-scratching, and people asking “What’s fixed?”
And of course, the answer is that nothing’s fixed. But the lesson is that crises don’t need to be “fixed” for market participants to stop panicking.
We wrote a lot about this last December, when the market was just starting to take off, pointing out that if you were waiting around for the problems to get “solved” then you were likely to miss the turn, since the market doesn’t have to wait for all the underlying issues to get resolved before moving in a new direction.
Of course, this rally really got cranking after the ECB announced its 3-year LTRO, plying cheap liquidity to the banks, which brings us to a second piece of more conventional wisdom: Don’t fight the Fed (Or the ECB in this case).