Stocks Cheer "Merkozy," VIX Collapses

After a “nail biter” week, global stocks cheered a settlement by “Team Merkozy,” German Chancellor Merkel and French President Sarkozy that could lead to a long term solution of the European debt crisis.

Around the world, European and American stocks soared as Europe agreed to move towards a tighter fiscal union and more economic discipline among its members.  Chancellor Merkel proclaimed that she had done what she wanted to do and her country's ETF, iShares MSCI Germany Index Fund (NYSEARCA:EWG) agreed with a one day 3.3% pop.  France rewarded President Sarkozy's efforts with a 3.6% gain in the iShares MSCI France Index (NYSEARCA:EWF) and U.S. investors liked what they heard with the S&P 500 (NYSEARCA:IVV) advancing 1.7%

Amid all the good cheer, however, VIX investors were left out of the party as the VIX, the “fear indicator,” (NYSEARCA:VIXY) falling off a cliff with a 13.8% decline.

Bottom line: Europe took global investors up to the brink of disaster today, and in the eleventh and a half hour, found a solution that markets found credible.  Now global financial markets have some breathing room and European financial and political leaders will have to “deliver the goods” or return to the precipice one day soon again.  For today, however, the stage is perfectly set for the long awaited Santa Rally.

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