It paid to be a short seller today (I was not, boo hoo). Declines across the board in the DJIA, Nasdaq, and S+P 500 indicate to this humble observer that equity markets are finally beginning to price in America's inability to put its fiscal house in order. U.S. economic data is going from not-so-bad to increasingly worrisome. Consumer spending is weakening thanks to the wage stagnation American workers have lived with since about 1974. It's not news (if you've been reading my blog) that the U.S. is in the same fiscal boat as Europe, with continental futures markets rendering their verdict on Italy's new crisis. It also shouldn't be news that the U.S. has become as economically sclerotic and plutocratic as Europe. That's a story for another day.
It is worth noting that, just like the 2008 financial crisis, ratings agencies' official pronouncements continue to lag market reality. For all of the bluster about putting Uncle Sam's bonds on negative watch, major rating agencies continue to uphold the government's triple-A rating. The obvious conclusion is that ratings agencies cannot be trusted.
If you still want to make a case for a bull market, you need to go somewhere else. Maybe the inmates at your local insane asylum would make a good test audience.
Full disclosure: Long FXI and GDX with covered calls, no other equity positions. Long California state municipal bonds. Lots of cash on hand too, ready to buy when people really panic.
It is worth noting that, just like the 2008 financial crisis, ratings agencies' official pronouncements continue to lag market reality. For all of the bluster about putting Uncle Sam's bonds on negative watch, major rating agencies continue to uphold the government's triple-A rating. The obvious conclusion is that ratings agencies cannot be trusted.
If you still want to make a case for a bull market, you need to go somewhere else. Maybe the inmates at your local insane asylum would make a good test audience.
Full disclosure: Long FXI and GDX with covered calls, no other equity positions. Long California state municipal bonds. Lots of cash on hand too, ready to buy when people really panic.
