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DOW + 7 = 17,817
SPX + 5 = 2069
NAS + 41 = 4754
10 YR YLD – .01 = 2.31%
OIL – .81 = 75.70
GOLD – 3.80 = 1199.30
SILV + .02 = 16.57

The S&P 500 has gained 11% since bottoming out in a slump that stretched from mid-September to mid-October. The rally has been driven by a belief that central bank actions in Europe, China and Japan will help invigorate global economic growth. On Friday, China’s central bank lowered a key interest rate and European Central Bank President Mario Draghi said he was willing to step up the bank’s efforts to stimulate the Eurozone, which has been struggling.

Speaking of European investors that sell assets to the ECB moving into other, more risky, assets that would help accelerate the euro area’s growth, Draghi said that higher prices for European assets might encourage some foreign holders to switch away from the euro, with “investors rebalancing portfolios away from euro-denominated assets towards other jurisdictions and currencies providing higher yields.”

Just to make sure that listeners got the message, he added there was evidence that the asset-purchase programs of the U.S. Federal Reserve and the Bank of Japan “led to a significant depreciation of their respective exchange rates, even in a situation in which long-term yields were already very low, as in Japan.” You have been warned; the euro, like the yen, is heading lower.

You have low interest rates and despite talk in the US about the Fed raising rates, that is a long way off, maybe another year; meanwhile long-term rates continue to grind lower in most parts of the world. If you want to find a quick and easy profit, borrow money in Germany, where the 10-year bund yields 0.8%, and put it in the US 10-year Treasury at 2.31%, plus you get the increase in the dollar. The euro looks set to continue its downward path, propelled by the strong desire of the weaker governments in the monetary union to see a further devaluation to aid Europe’s very patchy growth prospects. And if you feel a bit more risky, borrow money in Germany and put some in US stocks.

So, the markets are betting on global stimulus, or if you prefer, free money from the central bankers, but does that really help? Well, it certainly helps the financial markets, but the economy? … Not so much. Jens Weidmann, Germany’s central bank president delivered a speech today where he said that monetary policy alone can’t create growth, and must be based on higher productivity and policy reforms.