No bones about it, markets have been buying hype.  How many times since Greece became an everyday conversation piece in US Financial markets have we seen some form of hype regarding an improving situation in the Euro zone?  (It's lots, btw).  And how many of those times have resulted in "the bottom" seemingly suggested by the hype?  ("None" is the answer we're looking for here.)

But the thing about hype is that although it's a frustratingly poor predicter of what's about to happen, it ALSO almost always precedes it.  In other words, even if something has been hyped 10 times without coming to fruition, it's likely to have been hyped an 11th time as well.  And if the 11th time is the one where the "something" comes to fruition, well....  you get the idea.  Hype is usually crying wolf, except for that one time when it's not.

In the current sell-off, we have a few interesting ingredients present.  They're all contributing to the hype and all generally supportive of the 'hypers' making extra effort to convince themselves and others that "something's different this time."  Even we have done this (and we may not be wrong) after Draghi's now infamous London diatribe in which he delivered the dramatic promise of doing whatever it takes to save Europe and whatever he did, it would be enough. 

At that time, we noted a shift in the timidity of the ECB rhetoric.  In short, it was less timid.  It was like one of those "we're going to march down to Washington and tell the government what we think" sort of moments, except in this case the ECB really could march the 5.1km north-ish to the Bundesbank headquarters (if they were well-hydrated and it wasn't too hot outside).  In fact, that's not too far from what Draghi did. 

It's not that he made any real headway with the Bundesbank, but some cogs that were likely already set to begin turning, were attributed to these efforts when they finally began turning.  Some sort of "turning point" was perceived even if no one felt like "a major fix" for Europe had been discovered. 

That's the key ingredient leading to the current hype: this sense that "a bottom is in."  It comes at a bad time considering that, back at home, the Fed's QE3 has been hyped to death, perhaps literally.  Certainly a big part of the recent bond market sell-off is due to diminished QE expectations.  The past two weeks have presented a lull between the FOMC Announcement (the one where QE was a maybe, but a no show) and the FOMC Minutes.  It was also the two best weeks for market participants to vacation, most notably, pretty much the entire EU government (they take their vacations seriously we hear).  It ALSO followed fairly close on the heels of a recent all-time low Treasury and Bund yields...

You see where this is going?  We'd say "perfect storm," but that's a bit too buzzwordy anymore.  It's a storm for sure though.  End of days?  Probably not, but there will be more than a few people in the world who hear a clap of thunder on 12/21/12 and freak out just a little.