The longer you play the game the more predictable it becomes.
We know that the stock market is the last/greatest policy tool for government and thanks to Executive Order 12631, it is fully legal to intervene through whatever methods are necessary to stabilize or rally markets at any time.
Even in 2008, in the midst of the greatest crash of our lifetimes so far, the markets stabilized from Thanksgiving to shortly after Inauguration Day. Then they crashed again until the accounting rules were changed and money printing presses were started.
Like in so many years past, the Fiscal Year (no cliff) ended for money managers in October and profit taking began in earnest and across the board, but primarily in high-beta technology names like Apple. In two weeks the major indices lost 7-9%. But then, when nobody was paying attention, about half of the losses were made back in the holiday shortened week. Apple recovered $80 billion of market value in a few days. If you blinked you missed it.
Stocks are in “Sugar Plum Fairyland” this time of the year as markets trend higher about 80% of the Holiday Season. I’d like to think that this year will be the outlier, but the new reasons for caution, ie. the Cliff, is just another Red Herring Smokescreen to the real state of the economy.
We’ve just lived through another Black Friday shopping season and it is very much more of the same except more people are buying things with their phones. They are not buying more mind you, just coming through the newer doorway. And it is still very difficult to monetize as is much of the on-line world of advertising and e-commerce.
As we discussed last week, any pullback in dividend stocks was a gift of the first magnitude as there are few things more important to investors than the hunt for safe yield. “Growth” will trade up and down but yield will be the bedrock of retirement portfolios, taxes be damned.
The economic debate is meaningless as it is all just a show. There was a brief need for liquidity from market participants, but that has passed for now. So eat, drink and be merry!
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the governments job has been clearly defined. pick winners and losers. never mind :for the good of the country or logic.
Great summary as usual Scott.