The S&P 500 is Worth 1172.333
I picked this number out of you know where. The point is the media seems to gravitate to whoever is the most excited at the extremes 1070 and 1270. You would think, depending on the day, the world was either ending or happy times were here again. World economies are in a healing stage which may prevail for a long time, maybe two or three more years.
This morning everyone is in the woe stage since Greece didn’t do a slam dunk on the new deal. What does the world think? These decisions affect a lot of people all over the world and are not going to be settled in a few days. The important point, however, is that in a macro sense we are in the solutions stage that started in 2008 not the build up to a crisis stage, 2002 -2008, when lame thinkers and politicians thought there was no end to deregulation and the era of fast money. Of course that all followed the broader 1980 to 2002 stage when the foundation for all this was put in place .
The Fed is meeting today and tomorrow. Hopefully Bernanke will not go for easy money again like he did on QE2. His recent view of letting the politicians in congress and the White House work on employment and economic policy has led to a stabilizing sideways price adjustment process since the end of QE2 in June. Let’s hope Evans of the Chicago Fed does not prevail at this meeting and take us back to the inflation track.
In the meantime gold remains the weapon of choice for most investors as this solution stage continues. My premise remains that as the solutions start being embedded that the demand for gold will decline, probably dramatically, due to its price level, and the fact that the gold owners do not believe solutions are possible.