Markets Soar as Draghii Channels Chuck Norris, Jobless Claims Drop

      I like to talk about good news in the economy, being a glass is half full type of a guy. Lately the news has made that tough. Just yesterday, we saw the core countries in Europe were contracting too, with Germany at best barely growing during the 2nd quarter-the consensus seems to be that it grew at about 0.2% during the second quarter-and with some signs the U.S. may start to be dragged down by Europe-noticably the big miss by Apple, and more generally some very light earnings by early company reports.

      It has seemed that even companies that beat expectations didn't do it via higher revenue which calls into question the long term sustainability of any numbers. Yesterday there was a good sign out of Caterpillar's strong earnings which often is seen as a bellweather for the larger economy.

      Most of the news was bad however and you wondered if the U.S. can remain uninfected by a Europe which seems to offer little to hang your hat on going forward. Meanwhile Britain had terrible numbers, shrinking by 0.7% during the second quarter. I'm sure Cameron and Osbourne will take this as a sign there hasn't been enough austerity rather than too much.

     You hear Cameron's apologists claim that he hasn't started his austerity yet, so that's not to blame. This must have been what the old practitioners in leeches would assure patients of. In fact they already have done 30% of the proposed cuts.

      Today, however, you finally saw it: the kind of shock and awe people like Sumner and Nick Rowe talk about. I mean if anyone has ever channeled Chuck Norris, it was Mario Draghii today:

      "Futures initially rallied after European Central Bank President Mario Draghi pledged to do "whatever it takes" to protect the euro zone from collapse, including fighting unreasonably high government borrowing costs."

      "And believe me, it will be enough," said Draghi at an investment conference in London."

      http://www.cnbc.com/id/48335105

      This is just the kind of shock and awe central banks have been urged to show. Now we'll see if Bernanke lets himself be outshone by Draghii.

       "Major European markets, which had been flat for the day, turned positive following Draghi's remarks."

        "Hopes that the U.S. Federal Reserve will increase its efforts to stimulate a flagging economy, with some strategists saying the move will come as early as its rate-setting meeting next week, helped further soothe concerns about the economy."

        Meanwhile, U.S. jobless claims dropped very sharply:

        "On the economic front, weekly jobless claims fell 35,000 to a seasonally adjusted 353,000, dropping to almost a four-year low, according to the Labor Department."

         "And overall durable goods orders jumped 1.6 percent as demand for aircraft gained, according to the Commerce Department. Economists polled by Reuters had forecast orders to climb 0.4 percent after a previously reported 1.3 percent-gain in May. Excluding transportation, however, orders dropped 1.1 percent, logging the biggest slide since January."

         "That was a much sharper drop than economists expected. The prior week's figure was revised slightly higher.

          "The reading for jobless claims has been volatile this month because of the timing of the annual auto plant shutdowns for retooling. The reading had touched a four-year low in the July 7 week at 352,000. One measure that tries to smooth out this volatility, the four-week moving average for new claims, fell 8,750 to 367,250."

         "This year, automakers are carrying out fewer temporary plant shutdowns, throwing off the model the department uses to smooth the data for typical seasonal patterns."

        http://www.cnbc.com/id/48334146

        Your move, Ben.