What does Donald Trump know that Mario Draghi seemed to have forgotten for a time?
 
The front-runner for the Republican presidential nomination holds that position in large part because of his ability to get his message across. And, according to a recent analysis in the Boston Globe, that may be because his message is delivered in language simple enough for a fourth-grader to understand.
 
In an age of 140-character tweets and 10-second sound bites, simpler is better than the “highfalutin” language used by the laggards in the GOP and Democrat races, according to the Globe’s quantitative analysis of the readability of the candidates’ word choice and sentence structure.
 
Although he’s a neurosurgeon, Dr. Ben Carson communicates at a sixth-grade level, while Sens. Marco Rubio and Ted Cruz are at an eighth-grade level. Hillary Clinton, the Democrat front-runner, scores in the seventh-grade range. But her closest challenger, Sen. Bernie Sanders, speaks at a 10th-grade level, at the high end of the candidates, as does former Arkansas Gov. Mike Huckabee, who trails the GOP field. Clearly, lower is better.
 
This should serve as an example for financial professionals, according to Susan Weiner, a chartered financial analyst, who offered her advice on her Website investmentwriting.com: “If you want to attract and retain readers, lower the grade level of your writing.”
 
Most financial writing is aimed at readers with an educational attainment above the 12th grade—high school graduates and those with some college—which “may be too high for audiences with short attention spans.” To rectify this shortcoming, she suggests using www.hemingwayapp.com, which rates your writing for complexity and highlights sentences that might challenge readers’ erudition or lack of it. Indeed, it urges you to avoid long sentences (such as the previous one.) So, it should come as no surprise that my most recent column on Barrons.com was deemed to be at a 14th grade, or college, level—clearly unacceptable by current standards.
 
Draghi last week seemed to have forgotten that lesson in clear, direct communication. The European Central Bank president will be forever known for his simple yet dramatic declaration in 2012 to “do whatever it takes” to save the euro. Despite crises in Greece and Cyprus, and persistently high unemployment on most of the Continent, he has succeeded in that single-minded goal and gained the admiration of financial-market participants.
 
So much so, in fact, that Bloomberg dubbed Draghi as the world economy’s chief protector, supplanting Federal Reserve Chair Janet Yellen in that role. That was just before the ECB’s policy meeting Thursday, at which Draghi had been expected to announce expanded monetary stimulus.
 
Meanwhile, the U.S. central bank is expected to begin raising its key policy interest rate at the Federal Open Market Committee’s meeting on Dec. 15-16.
 
Draghi did unveil a further reduction of 10 basis points (0.10 of a percentage point) in the ECB’s deposit rate paid—or more accurately, charged—to banks to park their excess cash, to negative 0.3%. In addition, the bank’s quantitative-easing program, which consists of buying 60 billion euros ($65.2 billion) of securities each month, would be extended for an additional six months, to March 2017.
 
His words, however, fell short of what the markets wanted to hear, notably those looking for an immediate boost to QE purchases, to perhaps €80 billion a month, or a bigger cut in the deposit rate.

Whatever they expected, it wasn’t “whatever it takes” from the world economy’s putative protector.
 
The euro soared, bond yields on both sides of the Atlantic jumped, and stocks plunged. European government bonds were especially hard hit, with the benchmark 10-year German Bund’s yield rising 20.6 basis points, to 0.68%—a 45% increase in a single session.
 
In the U.S. Treasury market, the 10-year note’s yield followed suit with a 15-basis-point jump, to 2.33%. In price terms, however, the losses at the long end were especially striking. The iShares 20+ Year Treasury Bond TLT exchange-traded fund (ticker: TLT) lost 2.7% Thursday—nearly twice the 1.4% drop in the SPDR S&P 500  ETF (SPY.)
 
But Mario seemed to get his magic back Friday, perhaps finding it on his trans-Atlantic flight en route to a luncheon speech to the Economics Club of New York. While he did not repeat his famous “whatever it takes” mantra, he made clear he thought that the ECB’s policies were adequate to meet the bank’s goals, if not necessarily the expectations of the markets. And if more QE were needed to meet its policy aim to lift inflation to 2%, it would be forthcoming.
 
In a candid response to a question from Mervyn King, the former governor of the Bank of England, who asked if his comments Friday were an attempt to undo some of the market impact from Thursday’s announcement, Draghi said, “Not really…well…of course.” Appreciative chuckles from the assembled economics and finance types ensued.
 
Draghi dismissed speculation that dissent among the ECB’s governing council (notably from the Germans) kept him from taking more forceful action. Dissent is normal at central banks, including the Fed, but he added that lack of unanimity isn’t a constraint on his decisions. Neither is the size of the ECB balance sheet, which can be expanded as needed to meet its objectives. “We have the power to act. We have the determination to act. We have the commitment to act,” the ECB president stated emphatically.
 
Those terse, declarative sentences would have done William Strunk and E.B. White proud. (Their slim Elements of Style once served as the guide to clear, effective writing, in the days before online algorithms.)
 
And the words did the trick.
 
Stocks had been in rally mode before Draghi’s midday comments, but his straight talk gave the market an added kick. The Standard & Poor’s 500 and Dow Jones Industrial Average doubled their gains to wind up more than 2% on the session, their best one-day showing in nearly two and three months, respectively. That more than reversed Thursday’s losses. Clearly, Mario’s magic was back.
 
All of which shows that people are swayed by simple, succinct but powerful messages. More so, than by nuanced, sophisticated ones. And markets are no different.

THE WEEK’S NARRATIVE was less simplistic than Friday’s return of Super Mario to vanquish his less-than-super Thursday self. Yet central banks did dominate the story.
 
Stocks actually started tanking Wednesday, after Fed Chair Yellen made clear that the first hike in the federal-funds target rate since 2006 was all but certain. Of course, the FOMC’s decision next week depends on incoming data, but Friday’s news of a 211,000 rise in nonfarm payrolls for November erased any doubt about a liftoff from the 0% to 0.25% fed-funds target, which was set seven years ago this month in the depths of the financial crisis.
 
For the S&P 500, the slide from Wednesday’s pre-Janet peak to Thursday’s post-Mario low was about 3%. Yet, even with Friday’s stirring recovery, investors in U.S. equities ended the week down by some $100 billion, according to Wilshire Associates’ calculations. Bond investors also share the pain, and not just because of previously noted price declines in the Treasury sector, which were only partially reversed Friday.
 
Even against the backdrop of the equity market’s late-week rebound, junk bonds continued to slump. The SPDR Barclays High Yield Bond ETF (JNK) hit a 52-week low Friday while the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) hovered just above its yearly low. Part of that reflects stress in the energy sector, exemplified by Friday’s drop in benchmark U.S. crude prices below $40 a barrel, following the Organization of Petroleum Exporting Countries non-decision not to cut output.
 
For now, Evercore ISI’s technical maven, Richard Ross, sees the traditionally positive year-end seasonal trends keeping stocks moving higher, which leaves the Dow, S&P 500, and Russell 2000 small-cap benchmark essentially flat for the year, despite their neck-snapping swings.
 
Even with the euro’s rally Thursday, Ross still sees that the dollar’s trend is higher, which puts downward pressure on oil, other commodities, currencies (including the Chinese yuan, notwithstanding its symbolic inclusion in the International Monetary Fund’s Special Drawing Rights last week), and high-yield bonds. All of which he sees pressuring stocks lower in the new year.
 
That would be consistent with the Fed’s setting its initial hike later this month. Stocks have made virtually no progress since the central bank ended its QE in November 2014. Contrary to most Wall Street seers, Steven Ricchiuto, chief economist of Mizuho Securities USA, thinks a rate hike would be a mistake.
 
Yet, smart people sometimes do stupid things, he writes, as when the Bank of Japan raised rates to burst its asset bubble in the early 1990s or when the ECB hiked rates out of a misplaced inflation fear in 2011, leaving both those regions struggling with deflation. The People’s Bank of China’s sloppy handling of the stock selloff also will have negative long-term implications.
 
“Should the Fed make a policy mistake and hike rates, we expect the anticipated equity rally will run into a wall of selling, credit spreads will widen, the dollar will rise sharply, crude oil will break through the $40-a-barrel level [which has already happened] and the Treasury curve will flatten from both ends,” he writes.
 
Such a move, with higher short-term rates and lower long-term yields, is a classic portent of recession. A simple warning, likely to be unheeded.