It’s not even New Year’s Eve yet, and I’m already thinking about hangovers.
(Not mine, of course. I don’t drink any more these days. Then again, I don’t drink any less, either.)
Today I’m thinking about how the world is going to look and feel in the coming year, how the markets might react to likely events, and what might be shining over the investing horizon in 2012.
No matter how optimistic my nature is, and how hopeful I am that global issues will be addressed and eventually fixed, the truth is that it’s always darkest before the dawn.
Another way of saying that is, if you’re going to drink to excess, you’re going to suffer with a hangover. And the more you drink – and especially if you mix your drinks – the more likely it is you’re going to suffer the ill effects of too much indulgence. (At least that’s what I’ve heard.)
Is that some kind of metaphor, you ask? Of course it is – have you been drinking?
Out of far left field, I see something coming that I never expected.
It’s more like the coming together of pieces of a puzzle that have eluded us for too long.
By the way, Occupy Wall Street, if you’re listening, and I hope you are, and you’re still floundering (which I know you are) without a cause that anybody can really wrap their heads around, drop your drums, chants, and wanderings, and make the coming together of this puzzle what you’re protesting.
And make what could result what you are demanding.
Far from having my holiday spirits uplifted, I’m increasingly glum (about the markets, but not about life, liberty, and the pursuit of happiness) on account of the lack of any good cheer coming out of…well, anywhere.
Take Europe, for example. You know, Europe, as in the European Union. As in that region of the world that has always gotten along, happily sharing each other’s cultures, cuisines, and shrapnel wounds from their exploding sovereign debts, courtesy of a common currency that affords cheap financing for budget bludgeoning.
There’s no good cheer over there.
Didn’t anybody hear Christine Lagarde (formerly one Europe’s own when she was running finances for France, but now runs around with whips and chains as the high-heeled dominatrix of the IMF)? Last week she said that if we don’t all work together our situation will be similar to the 1930s.
She wasn’t just talking to the Europeans. She was warning world leaders and central bankers.
Good thing Fed Chairman Ben Bernanke got the message. He told lawmakers last week that they have “no further plans to aid European banks.”
So much for holiday spirit.
But, I think the Beard is just too modest; he wants to be a secret Santa.
In fact, there’s really a lot of gift-giving going on over in Europe. If you look closely you’ll see that stockings and sacks are being filled, and the Fed was the first to contribute.
But (frighteningly, if not ominously), if you look closer you’ll see those stockings and sacks aren’t being filled with presents, they’re being filled with sand. They’re sandbags.
Sandbags? Yes, sandbags, as in the last ditch effort to save towns from catastrophic flooding when the big dam breaks.
Some of my very well educated friends have some very simple explanations to complex issues.
For example, I might ask, “So, what do you make of all that?”
One genius (literally) buddy of mine will ponder the imponderable, look at me with a knowing smile (which I presume will yield some incredible insight) and say, after a pause, “Everything is everything.”
On the other hand, I have another good friend who barely got out of high school, and he has a similar saying. I’ll ask him how his life is going, and he’ll answer, “It is what it is.”
There’s a ton of “insight” to be meted out about what’s going on in the market. You’ve heard most of it from me, and everybody else. But today and tomorrow will be all about being an insider at the meetings going on over in Europe.
Oh, to be a fly on the wall at those meetings…
What we couldn’t do with a little “inside information!”
But we can’t be there, and besides, that would be insider trading, wouldn’t it?
So, we’ll all just have to stay glued to CNBC and Bloomberg to see what the future holds for us all.
Speaking of trading on inside information…
Have you heard about the hearings up on Capitol Hill?
Oh yeah, there’s been serious discussions in Congress – by Congressmen and women -about reports of insider trading being conducted by privilege insiders, namely, some of their own.
It seems our always honest, always on-top-of-it, always looking-out-for-themselves Congressional leaders and their rank (and I do mean rank) and file are at it again, proving that although their net worth to the public may be zero, their access to non-public information is priceless.
“Rudolph with your nose so bright, won’t you guide my sleigh tonight…”
Thank goodness there’s a light out there somewhere, so we can see what’s coming.
And judging by last week’s market action, guess what?
Santa Claus is coming to town!
Ho, ho, ho, what a rally. The Dow Jones Industrials rose 787.64 points, a 7.01% jump, making it the venerable benchmark’s second-best weekly up-move ever! The S&P 500 rocketed up 7.39%. The Nasdaq Composite shot up 7.59%.
But the real winner was the broader market, encompassing the less muscular household names ensconced in the Russell 2000; it rose a whopping 10.34%.
Speaking of the 10% gainers club, guess who else got their tickets punched on this sleigh ride? Not surprisingly (considering a little thing called “short-covering”), Italy was up 10.4%, Spain was up 10.24%. France was up 10.78%, and Germany was up 10.7%.
The week before last, not one single stock market in the world advanced by even a hair. Last week, every single key stock market in the world rose – and very impressively.
Oh, wait a minute. There was one little country that actually fell almost 1%. Good thing they’re not on anybody’s radar and don’t matter much. Who was it, you ask?
In yet another sign that markets are broken, yesterday’s huge market advance came on the heels of two presumably separate (yeah, right) central bank moves.
Both were designed to add liquidity and support to shaky and dangerously deteriorating markets.
(That was good news?)
First, China lowered the reserve ratio its banks have to hold against loans they make. They didn’t do that because things over there are rosy. They did it because the property market is teetering and financing has been drying up.
The problem I have with providing “insight” into the market is that the deeper I look, the darker it gets.
Right now I can’t see through to the other side. It’s just that murky everywhere.
Not only did the S&P 500 fall 56.98 points (or 4.7%) last week, but it broke important support at 1160, ending Friday at 1158.67. The benchmark also broke its 50-day moving average back on Monday.
Cumulative breadth (advancing issues minus declining issues) has been tanking.
And speaking of slip-sliding away, third-quarter GDP growth here in the U.S. was revised down to 2% from the previously reported (make that estimated) 2.5%.
Downward pressure was evident across the globe, in terms of GDP growth expectations, sovereign creditworthiness, and stock markets.
In fact, I can’t find any equity benchmark anywhere in the world that rose last week. That’s because there wasn’t one.
What there was a lot of last week – and what there will continue to be a lot more of – is mounting fear that the European Union is about to become unglued. The Eurozone is already being held together with nothing more than Band-Aids and hope, but increasingly those Band-Aids are falling off.
If you’re not feeling very “happy,” remember, no matter how bad things are, they could always get worse (and we may be going there). So, whatever you have now, be thankful for that.
Speaking of thanks and of things getting worse, here’s a shout out to the so-called “Super Committee:”
Thanks for nothing!
What a bunch of losers.
Hmmm, speaking of losing… I wonder if anyone on the Supercilious Committee shorted the market before their announcement that they had nothing to announce. Hey, maybe they waited until the end of the day on Monday – when it was already known that they had sold America short – to break the news, so they could add to their shorts as stocks broke support levels.
No “maybe” about, it in my book.
Oh, you don’t think they would do that – short the market? You think that would be unethical? You think that would be illegal? You think that’s insider trading?
It’s not any of those things, according to Congress.
If you’re about to sit down to your big Thanksgiving dinner and are scared you’ll eat too much, don’t worry. You’re about to lose your appetite, and probably get sick, too.