Stocks apparently rallied because Berlusconi is resigning from...

Stocks apparently rallied because Berlusconi is resigning from power (it’s interesting that fraud, corruption & sexual assault allegations, including Bung Bunga parties, could not out him but the economy could). How many times have analysts blamed every decline on “uncertainty in Europe” and attributed every rally on “hopes for a debt resolution in Europe”?

But as stocks rallied over the past two months, the European situation has actually become more uncertain, not less. Stocks have already climbed the wall of worry and are now being pushed higher by the last refuges of hope on peaking optimism for a final resolution to the debt debacle.

Stocks even rallied as Italian bond yields spiked to Euro-era record highs overnight. When stocks fall again, the analysts and media will belatedly turn their focus to this key issue as the 'reason' to rationalize the decline. Understanding social mood, at various degrees of trend, provides a unique perspective and foresight to what’s really driving financial markets.