Market Weather

As we enter the last week in July, stock indexes continue the climb at a pace where Bears are finding great discomfort. The half way back retracement to 10,000 DJIA could come a bit faster than many had thought, but of coarse timing is everything. Pricing of stocks from outside the US has been a major factor as purchases are made against the belief in a Fed Put. Articles claiming revisions on earning estimates may contribute to further gains are also abundant. They are always based on revelations that analysts have once again been fooled by their corporate targets having been duped by a combination of what little analysis they actually do and the gamed numbers the corporations they cover have shown them. Like weathermen, analyst's work is not science, but a form a guessing based on conditions someone else witnessed.

So all the Bulls have to worry about is a sudden bit of news which would kick apart the somewhat fragile coalition they have with low volume rallies. Like the stock analysts, it will be a surprise.

China Schmina

A story about China but an example of a bad habit of continuing to rely on or even believe the strength of China stories. China is on a slippery slope, dancing on top of a rolling ball, injecting funds to pump an economy in order to keep the masses from turning ugly. Another prop job.

The Goldman Test

The Obama administration's economic intervention efforts unfortunately have a litmus test for gauging whether or not the world economic order is stabilising, Goldman needs to be able to continue making huge amounts of money using the old models. The Goldman test is of course Geithner's plan for using public subsidisation of trading capital for Goldman and others, resulting in wider profit margins helped by being able to look at all the stimulus cards. While the fools in the Republican party complain about the inevitable middle class becoming slaves to socialism, the financial industry, a Republican stalwart, keeps applying the old model skills. Now this test will confirm Goldman is healthy and the credit lines between the rest of the lower economic forces are moving, but ultimately will provide little life for the general population as jobs stagnate and their assets dwindle.

Obama's recent statements explaining the need for patience to allow the stimulus to work is a clear sign it is not having any effect on the larger economy. The velocity with which Goldman has recovered under direct subsidy by the G will become a greater problem as Goldman disappears over the greater wealth horizon, leaving the rest to scolded by Republicans that those rewards are not meant for us.

Economic Recovery Map

The economic recovery map pushed by most forecasters is probably a bit rosier than it should be but certainly a more realistic view than those who point to the inevitable path to economic destruction. The most bearish have impressive examples of ailings; real estate losses of five to seven trillion dollars, retirement and savings losses of close to 10 trillion dollars, and staggering losses around the globe virtually mirroring the U.S. disaster. Issuance of corporate bonds at an ever growing pace at extended maturities suggests more hunkering and less spending as such debt instruments reveal the pursuit of returns pointed towards savings rather than investing in growth.

The bulls exhibit some of the same mindless tendencies which has always been apart of the efficient market crap. And when all else fails, they always will have China saving us all of by providing market opportunities through a notion of a rapidly growing totalitarian state immune from severe downturns and social upheaval.

The love hate by conservative thinkers over the pledge of over 10 trillion dollars by the G to remedy financial disaster is entertaining when viewing swings in the underlying markets from which the have become glued. Since the recovery in March, they have almost claimed the whole economic collapse was just a bump in the road to greater market performance. Of course they will be the first to cry and extend their hands should another rout appear.