How Serious are Things Here?
There is no question that the CEO’s of the Fortune 500 companies put company before country, and much, probably the majority of the investment community would agree with that focus. Since the beginning of this country the battle between US workers and US companies has raged back and forth and maybe only after WWII during the 50’s and 60’s did we see a period when everyone seemed to work together for a common goal. The New York Times started a series last Sunday on the challenges that this country faces in getting its jobs back. This is the first article in the series that has evolved.
Paul Krugman had a followup on it last Friday:
Our Outlook for the Year that we put out a couple of weeks ago basically said that this is going to be a year of sideways adjustment. So far in terms of stocks, things are getting a bit elevated. That is somewhat dangerous because nothing is being fixed on the fiscal side. Uncertainty remains the back up word and will continue to be the backup word until it becomes certain of who is going to win the next election. At the moment the fat cats are breathing a sigh of relief as Romney moves up in the polls again. Remember what Kudlow’s crowd says, ” Romney spells Rally” and I suppose if Obama wins ” Obama spells OMG” for this group. The FED has its hands tied and while it is trying to use bluster to get things going, the fact is, the real economy is still not using what the FED has poured in the past two years.
So some market analysts are getting excited. Joe Granville, who wrote the first trading book that I read when I entered the business in 1970 (I think it was written in the early 60’s) is 89 now and still forecasting markets. He has been spectacularly right and he has been spectacularly wrong at times over the years but he is always worth paying attention. See video here:
Secondly John Mauldin, who I listed in my links area on the first day of this website (January 22nd was our four year anniversary), has an excellent letter this week on the risk building up, plus he includes material from Barry Ritholtz:
As Ritholtz sums up the current situation:
“The tipping point between central bank balance sheet expansion being bullish for risk assets versus bearish is impossible to know. Given the growth rate of central bank balance sheets around the world over the past few years, we might not have to wait too long to find out. Enjoy it while it is still bullish.”
And one more item to fill out your reading of the risk factors this morning: