There are Still Choices
What we mean is that the world has not come to the end. As we repeatedly point out this is not 2008. The Europeans have choices, the Germans have a lot of money, the question is how much they want to help out or maybe better put, how much they are forced to help out. In the US we have choices also. There are sectors of our economy that are very well off and sitting on huge hoards of cash. These sectors are both corporate and individual. We will get worried when there are no policy choices, we are not at that point today.
So what we have seen since early July is a wakeup call, a call to look at the choices and make some hard decisions that will help the country, not decisions about who will be in power after 2012. Can Washington rise that high? We will see, but in the mean time we will be faced with a lot of cross currents and as we have repeately said the markets, both commodities and stocks, are in a price distribution phase and this will continue through the election.
Yesterday was more than likely the bottom of the distribution range on some markets.. Some commodities like oil and copper are down to level where they can kind of level off. The XLF financial ETF put in an impressive performance yesterday closing above the important 11.20s level after trading well below it all day, so the banks may also level off. Keep in mind we are not talking about bull markets starting here, calls for an end of year S&P 500 index at 1500 by some analysts are way off base.
Which leaves the gold bugs. They cannot survive when the world is not ending and as one commentator said recently, if things got as bad as the goldbugs say they will, a case of canned beans will be worth more than an ounce of gold. You cannot eat it.