The financial markets exploded to the upside overnight with news of Europe’s triple resolution of their sovereign debt crisis. As I predicted in my letter only yesterday, the move has caught traders by surprise, enabling markets to break out to the upside from the recent ranges, and give this fall rally longer legs than most expect.

As I write this piece, the (SPX) futures have popped to 1275, a new high for this move. Ten year Treasury yields have ratcheted back up to 2.26%, and the dollar is in full flight against a basket of currencies. Here are the details in summary:

*Capital for the European Financial Stability Fund will be increased to €1 trillion.

*Greek debt will be written down 50%, halving the country’s debt to GDP ratio in one fell swoop.

*European bank capital ratios must be raised from 6% to 9% by June next year.

(more…)