Markets Rebound After Gold & Oil Blood Bath

Major indices such as NYSEARCA:SPY and NYSEARCA:DIA improved less than half a percent today in response to improved economic reports; however mixed feelings over Europe (still), and Gold (NYSEARCA:GLD) and Oil’s (NYSEARCA:USO) massive sell-off yesterday prevented any real improvement in markets.

Jobless claims have dropped from 390,000 to 366,000 last week which is the sharpest decline and lowest level of jobless claims since May of 2008.  Meanwhile, the Empire State Index which measures manufacturing activity in New York State has risen from 3.0 in November to 9.5 in December.

Gold and Oil, unfortunately, are still plunging, although the pace has slowed, as NYSEARCA:IAU only dropped 0.26% compared to yesterday’s drop and NYSEARCA:USO only dropped 1.45% compared to yesterdays 5%.

In other negative news, Fitch Ratings downgraded six banks in their ability to satisfy long-term obligations; banks include Bank of America (NYSE:BAC), Barclays (NYSE:BCS), BNP Paribas (EPA:BNP), Goldman Sachs (NYSE:GS), Deutsche Bank (NYSE:DB), and Credit Suisse AG (NYSE:CS).  At least for today, other ratings agencies including Standard & Poors (NYSEARCA:SPY) did not participate in the ratings bonanza that has taken place in recent history.

Problematically, downgrading banks’ and Country’s ratings do not fix the Western World’s debt problems…This principle applies to the fact that France (NYSEARCA:EWQ) is now on the chopping block for too much debt; in addition the UK (NYSEARCA:EWU) which is also now on the ratings agencies’ radar for not joining in on the “tigher fiscal union” fray of current European (NYSEARCA:FXE) politics.   Either way, despite all of these downgrades, the debt still does not go anywhere, and Europe (NYSEARCA:IEV) still remains on the brink of a recession.

The game of “musical prime minister chairs” does not fix austerity or debt issues either, however the Italians (NYSEARCA:EWI) seem to believe that a “no confidence vote” against current Prime Minister Mario Monti this Friday will somehow ease things along…

To further extend this conversation, Russ Koesterich of iShares shares some interesting words about Europe and the global economy in his article titled “The European Overhang and Odds Of a Meltdown”

Bottom Line: Despite all of Europe’s woes and a continued threat that Santa will not fly this year, at least we can say that despite an overwhelming deficit and imminent (again) Federal Government shut-down this week,  America and its economy are slowly improving.

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