Stock Market Insanity Follow-up

On Tuesday, I wrote about the annoying fluctuations in the stock market.  It concerned a 200 point drop due to the financial situation in Spain of  which everyone in the world is aware at this point.  This afternoon the Dow Jones Industrial Average is up close to 200 points.  Why?  Because Mario Draghi, president of the European Central Bank said he will do whatever it takes to preserve the Euro, including getting involved in the bond markets to put the brakes on the increasing yields in Spain.  While of course I’m happy with the large rise in the market, it doesn’t change the fact that Spain is on the brink along with Greece, and France not far behind.  With Francois Hollande now at the helm, the situation could turn ugly very quickly.  Draghi’s speech is a nice “feel-good” statement but bogus, nonsense.  You mean to tell me, if as I suspect, Spain is even in worse shape than expected and France’s economy falters, the European Central Bank is going to have a free money charity day?  Tomorrow this story will be over, reality will set back in, and the market will drop 200 points.  This is a story that grows ever more tiresome and ever more nonsensical.  Let’s just accept the financial crisis in Europe and deal with it.  On to some real numbers, the earnings from the US have been ok, with almost 2/3 of companies reporting earnings so far, beating estimates.  At the end of day, the S & P 500 should be flat to slightly negative which would end the string of ten consecutive positive quarters.  Given what’s happening in Europe, the numbers have not been terrible.  Finally, expect Facebook -1.89 to continue heading south as Zynga is plummeting 39% to $3.11.  Facebook generates a good portion of its revenue from the online game developer.  These are legitimate numbers and legitimate facts.  As I have been saying from the FB initial offering, the correct price should be somewhere around $20.00-$22.00.   And that was with Zynga generating decent revenue.  Now, who knows?

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