So, I'm rushing to take my son to Urban Outfitters before my hit on "Hannity" last night and we turn the corner and I hear a familiar sound. It was the sound of a plastic bucket turned oil drum, and it came from a block away. I could see a crowd, and even a barricade, and I'm wondering did the OWS movement head uptown. As I got closer I could see it was a bunch of kids in ratty clothes making a ruckus.
The beat was nice, and the crowd was friendly. As it turned out, however, these were a bunch of young kids worried about their future, but taking care of business today. I've seen this scene before, but it was a pleasant reminder that in the face of doubt we can try different things to address our concerns. None of the kids or their adult companions had graduate degrees from Columbia.
For these kids, yesterday will be about the same as tomorrow. It's a hell of a struggle that could be met with cowering fear, primal anger, or head on with aplomb. One option not available for these kids was to complain about how much others had or how unfair the world is. I've been trying to hustle (or as we called it back in my old neighborhood "scramble") since I was 12 or 13 years old, and while I've screamed about how unfair life is, and I've even joined a march or two, I always knew my destiny was in my own hands. There is a heavy beat of disenchantment in the land that has a hypnotic allure but can lead to an exhausting dance to nowhere.
The kids playing on 5th Avenue in New York, just a few blocks from Broadway and its array of movie stars, will not be hailed as heroes or make the cover of magazines. Those kids will not spark a revolution. Those kids aren't the result of an entitlement mentality. Those kids will just pick up the pieces of their lives by picking up drum sticks and old plastic buckets. Their beat will move the crowd in rhythm of joy and happiness. They will live, and maybe some will save enough money to do something else, but what they will not do is become someone else's liability or guilt trip.
What we are mostly seeing in New York, and now other cities, is like protests in Europe to austerity measures and realization that socialism ran out of other people's money and now the next generation has to roll up their sleeves and figure it out a different way. Many of those people would never consider straight hustling (scrambling) on the street as that is beneath them although the notion of taking something someone else has earned is viewed as noble.
Bernanke's Last Hope
The stock market rally from last Tuesday is Ben Bernanke's last hope and perhaps our last hope, too. That so-called Jobs Bill is a sham and will not work beyond temp jobs and more government crowding out of private capital. Ben Bernanke is hoping that a combination of a stock market rally and the housing market finally hitting terra firma will be the right elixir to unlock wealth otherwise too afraid to get off the dime. Moreover, a higher market could suggest the economy is getting better, and it's critical people believe things will get better. This is why I find it weird the Fed didn't make an even more aggressive move than rearranging the deck chairs because that iceberg called no-confidence lurks about.
On the note of confidence, the NFIB Small Business index is out this morning with a tiny nudge higher, but with earnings dipping. While headlines scream about Occupy Wall Street and tax the rich, small businesses know they are the ultimate target to pay for massive government spending.
As unions and other left wing groups hijack the OWS protest the tactics will look familiar, like today's March on the homes of millionaires in Manhattan. In the meantime, there is a worrisome report from New York State Comptroller Thomas Di Napoli who sees another 10,000 financial sector job losses through 2012. This, coupled with the 22,000 jobs already lost, is going to be a devastating blow to the city which sees one out of eight jobs associated with mean old Wall Street. So the notion of confidence is going to be a lot tougher for those still losing their jobs three years after the crisis began.
Here's the next challenge for this nascent market rally, retesting the bottom. There are pure technicians out there that still say major indices must re-test 2008 lows, so it goes without saying most will argue the need for the market to test last Tuesday's intra-day low.
> Dow: 10,362
> S&P 500: 1,074
> NASDAQ: 2,298
The problem with this assumption is it cost a lot of people a lot of money in 2008/2009 as they waited and waited for the market to pullback and test the low. It's too early to say if last Tuesday was the low, but it was a critical inflection point. It's going to be very important for investors not to get so mired in self-doubt and frustration they throw in the towel or think somehow they are going to pinpoint the exact bottom. I've said before I don't think there will be classic capitulation because so many people have already been shaken out of the market.
The flip side of this is the breakout that I think occurs with the Dow closing above 11,600 (although there is a serious upside test around 12,000). For now, we are still range-bound, but I think the swift 1,000 point rally underscores the potential with this market if some of the dark clouds faded away.
I wouldn't force the issue this morning but would pay close attention as the bias has shifted to the upside and a re-test isn't guaranteed.