December 8, 2009
NO STICK SAVE TODAY
The market headed down out of the gate this morning following Asia and Europe and mixed-in with Dubai worries; country credit rating downgrades; and, a strengthening dollar which weakens the “dollar carry trade”. But then the president made a curious speech stating among other things, “We must spend our way out of” this recession. Since this White House, like so many others before, read poll data and with the public very much against more spending and higher deficits, it made no political sense and perhaps exacerbated further selling today. And yes, that’s just a guess; but, the 2:15 Buy Program Express didn’t make it out of the station today.
Before the open this morning, came a bullish prediction from GS: “The S&P 500 may rally a further 13 percent to 1,250 by the end of next year as interest rates remain low, revenue grows and investors pour money into U.S. stocks. Continued profit margin resiliency from prior aggressive cost reductions should drive strong returns in early 2010 and push the S&P 500 towards 1,300. Equity investors will begin to rush for the proverbial exit ahead of what consensus believes will be the start of an interest rate tightening cycle.”
So, the rally we’ve seen is based on financial engineering but not job growth or real production gains. At least that’s what one can infer from the prophets on high at GS as they continue “God’s work”.