Market reactions before and after the European summit followed the typical manic-depressive pattern that has prevailed for some time, alternating between euphoria and disappointment. Asian equity gains over the past two weeks are now being absorbed (-1% today for the regional index) and the only strong point lies in the US economic situation, where the news is almost all positive (good retail sales are expected in a month, like December, which is essential for the profits of the retail sector for the whole year).
The markets would have wanted sensational and decisive initiatives - massive purchases of securities by the ECB, issue of Eurobonds, banking license from the EFSF - and they were disappointed. But the Eurozone's modus operandi is one of small but significant steps forward. The Gordian knots are not cut with the sword but with patient unrolling. The agreement on the centralization of public finance decision-making is significant and the markets will one day recognize it. For now they continue the war of attrition, which makes everyone poorer.
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