Since last summer, just after the Europeans began to “print” money to buy the Sovereign Debt that nobody else would buy, the markets have been on a slow, steady uptrend. I’ve enjoyed the “10 days up, 10 days flat and 2 days of terror” each and every month. But we may now see that changing.
We already know from past experience that each year’s third and fourth quarters are marked by a pickup in economic activity leading up to the holiday season. The pickup is heralded each year as a bone-fide economic recovery. Then, in each year, the first quarter severely disappoints on the earnings and growth front. It has been our pattern for the past four years and the markets are only to happy to fall for it, hook, line & sinker.
But the last day/first day of the year witnessed an giant “fuck you” to everyone. The Dow gained “only” 300 points but the SPX gained 60 points and the Nasdaq gained 150 points. In just two trading days. If you were short: fucked. If you were flat: fucked. If you were trying to buy: fucked. Only the perennially long, through thick and thin derived benefit. And why not? As long as markets go up, there are no real problems that will have to be dealt with. That is the gospel truth. Hallelujah!
Was the market movement based solely on the Fiscal Cliff bullshit? Does it matter if it is “fixed” or not? The government will tell the markets what they demand to hear. Nothing more, nothing less. Now they are talking about a “trillion dollar coin” to fix our ills. This is tanenmount to the government simply printing money for its needs. I was afraid that one day the Congress would realize that the FED was printing all the money that banks and the government need and they would formally ask to get rid of all the “middle men” and take the cash directly. Hell, its easier than passing tax reform or spending cuts!
And the Capital Markets? They couldn’t give a shit. All anyone cares about is “price”. The charts stay bullish so buy. This is exactly what the conspiracy-derived “Presidents Working Group” has been busy with each and every morning, pre-market.
But with the latest “blink-and-you-miss-it” pop in markets to multi-year highs, the tone has seemed to change, at least for the moment. Perhaps each month will now have “10 days down, 10 days flat and 2 days of orgiastic short-busting upside”.
Never mind that earnings will suck. Never mind the government disfunction. Never mind anything. Just count on at least $85 billion per month to keep the ball in the air and new all time highs just around the corner.