With great fanfare, the big news of the week was that finally the Silly Season has ended; to the winners go the spoils, to the loser…soul searching. The election essentially unspoiled the status quo and now the frenzied media, realizing that there’s no real story to be had there anymore, shifted their attention immediately shifted to the impending “Fiscal Cliff.” Ahem, dear media, by the time you hear the sirens, it’s already too late. You’re about as useful as a football bat. Anyone paying attention has followed this issue for months, literally.
For the record, I sincerely believe, that with the election results being what they are and the demographic and political landscapes being forever changed, that the possibilities of a “Grand Barging” being achieved in the next few weeks / months are entirely realistic. Yes, we still have the same moronic players in Congress but the circumstances are different if not historic. The consequences of non-action will touch nearly every segment of American society regarding increasing taxes. I would not be shocked to see specifics emerge before the end of the month as the adults in the room finally decide to speak up.
Last week’s other big news was the highly volatile markets. Wednesday opened with a severe move downward and gave us a 2% down day on the heavy volume. Thursday carried the markets further to the downside and by Friday’s closing bell; all of the major U.S. equity indexes were negative by more than 2% on the week. The S&P 500 closed below 1,400, the Dow Industrials below 13,000, the NASDAQ below 3,000, and the Russell 2000 below 800. It wasn’t only the political candidates who were made slack-jawed immediately after the elections. Can it be called the Obama pullback? It’s no secret that Wall Street wanted different electoral results however I reason to suggest that Europe held significant sway over last week’s market actions. And by the way, there’s more of that to come, I suspect as European economic reports showed further deterioration. Mario Draghi’s (European Central Bank’s President) comments regarding Germany on Wednesday actually sent the European market into a tail spin which in turn took down the US Markets.
I remain optimistic. The time to ignore reality and remain in an information free cocoon must come to an end. I remain optimistic, but cautious.
Dempster R. “Bobby” Cherry