Germany gets her way and enslaves the Greeks which…
Paves the way for markets to go higher.
When you read news articles this week you will read the Greek parliament succumbed to the E.U.
It is a misprint.
The Greek parliament succumbed to Mario Draghi and the German Union. Anyone telling you the European Union is a group of independent states come together for the common economic good of Europe has the blinders on. The European Union was a fraud from the beginning. It was set up so the strongest states in Europe could survive and thrive off the backs of the weaker economies in an environment where the only thing common about the European Union was the currency. Germany has had a decided advantage over the rest of Europe operating in an environment where the only thing that changed was a much weaker than normal dollar for export allowing German industry to flourish where it once had to compete against the high cost of exports. When the EU came into fruition, it gave Germany overnight a decided advantage over the rest of Europe. Just over a decade later, Germany is on the verge of controlling 3 European states….Greece, Ireland and Italy. When Germany runs your country, you are in for some pretty severe times while they try and streamline your nation’s economy. Extreme and drastic cuts of 20% to the minimum wage further enslave the poorest of the poor in the Greek economy.
The Germans live in a country with no minimum wage so this is obviously no big deal to them. So would you expect any less?
I have no opinion on how minimum wage affects the economy. I do know that minimum wage raises the standard of living for the poorest people in society. Canada has one of the highest minimum wages internationally while Germany has none. Greek minimum wage is not the problem as the dutch have double the Greeks minimum wage. Greek minimum wage is only 66% their Canadian counterparts.
Super Mario…? Suuuure… The bond vigilantes were his dogs.
Someone give this guy a medal for calling off his own dogs. Some are calling Draghi Super Mario for supposedly arranging financing’s that brought rates down in the peripherals, we all know better. As soon as Germany had her German Sachs people in place in the Italy, Greece and the EU. The bond vigilantes suddenly disappeared. Coincidence? I don’t think so.
Nice to know you can hire out rouge American financial institutions to target your enemies’ financial paper and force them to into submission.
This is 21st century warfare and you have just seen the 21st century financial version of German blitzkrieg over the rest of Europe. Done by none other than Germany, Euro Sachs, and the Goldman Union.
The good news with the Greeks passing their austerity measures to secure payments is that markets can now ignore Europe and let them muddle in mess while the rest of the world returns to growth.
What depresses this picture even more… you might not like the way Germany is going about taking financial control of Europe, but after it is said and done, there may be economic benefit to being ruled by a country like Germany who understands what it takes to be a leading global economy. There will be benefit from having streamlined economic policies, and reforms across Europe that create a true economic block under German control.
The even better good news… No one really cares as long as Europe remains a stinky smelly pile of poo across the sea.
Let’s just applaud Germany for finally doing what they couldn’t do 100 years ago and give them even more kudos for not using tanks this time.
Trading patterns (Algo) indicate typical bull market activity
One thing I have noticed in this market is a strong pattern of selling worries and news and then having the market grind higher by the end of the day. This is a typical bull market trading pattern climbing the wall of worry. Sell the resistance in the morning on worry and then climb back up that wall. The underlying fundamentals scream that you want to be long this market and the action confirms this. Sell the jitters and buy the reality.
There will be no liquidity event in 2012.
This market remains extremely cheap with the US markets in a recovery mode and the whole world expecting China to bottom this year with a pro-stimulus regime assuming power. A China bottom is what investors are waiting for on the TSX and materials stocks. Without a China bottom, the TSX will never have the 1,000 point premium it commanded less than a year ago. With little expectation of direct QE injections by the FED this year and playing the waiting game for China to come out its slump, now is an excellent time to buy many oversold materials stocks. Two sayings that come to mind are… “buy them when no one wants them” and “BUY LOW.”
In the middle of a Mining Supercycle… you can’t really say no one wants them, but many oversold commodities stocks are trading at or near 2009 lows.
The TSX remains a screaming buy. I don’t expect the TSX to lead the market anytime soon as the American markets are leading the recovery and will continue to. I do see very good value on the TSX. The TSX has traded a premium to the INDU and I expect that premium will come back as commodities come back in vogue. This won’t’ happen until China starts heating up although the smart money has been driving many copper stocks and even the actual commodity back up in January. Many are expecting a Chinese recovery, this is clearly noted in the recent moves in copper stocks and the underlying commodity. Is Doctor Copper right? With copper stocks one of the big movers so far in 2012, it looks like emerging markets may finally be out of their funk.
For now, momentum remains firmly entrenched in the US markets with investors searching for yield, value and growth. There is still a lot of that in American markets at the moment.
With the S & P 500 at record earnings and the lowest multiples over the last decade except for the 2008 crash, a higher multiple will drive this market to and through a breakout this spring even on less than stellar earnings reports in Q1. This market deserves a much higher multiple at this point in the US recovery. Currently the market receives earnings multiples of 13 times which puts the SPX at around 1,350 for the year. Just on increased earnings multiples to 14 or 15, could see markets hit 1,400 to 1,500 by the end of the year. If the US recovery continues to pick up steam.
46% of companies’ earning’s misses a sign of capital spending and hiring…
Not an economic slowdown
One negative sentiment I see in the headlines is that companies are not beating this quarter estimates like they did in last few quarters for which some bears are taking as evidence of a turnover and a top in the markets. I see things much differently as both hiring and capital spending will eat into the bottom lines of corporate profits. So for some who say there is evidence that we are at a top… I say this is evidence that we are finally seeing the long awaited jobs recovery and capital spending hit the books.This is good and will reinforce another 12 to 18 month bull market with increasing sentiment across the entire economy. If this is the year that US housing starts to re-inflate, 2008 and 2009 will be a distant memory.
After all is said and done it’s not earnings beats that drive the economy and GDP growth, it is hiring and capital spending. With the USD at relative lows compared to global currencies and rising labor costs in developing markets. The outsource decision is often not an alternative that is put on the table as much. Companies may even start repatriating profits and focusing on spending in the US where growth and expansion in many sectors has been non existent for the last decade or two. The USA is a much more competitive manufacturing block than it has been in decades and prospects of an even weaker dollar to come make manufacturing in the USA a possibility. Setting up shop in the USA is a foreign concept to most boards, but the numbers don’t lie, repatriating profits to invest back in the USA economy is a viable alternative for many of these multi-national US companies.
Technically speaking…
This market wants to go higher. Everything the market is doing points to a major breakout this spring. One point that I didn’t realize that Eric Coffin was kind enough to bring up at the World Outlook Conference in Vancouver, BC… this is a sell in May year for Canadian stocks and this year Canadian companies won’t be affected by the typical PDAC March curse. The one factor that changes the habitual selling in March this year is the fact that there were not many private placement financing’s in fall 2011 meaning there will not be many free trading shares that financiers are looking to dump on the market after the 4 month hold.
December saw a definitive break in downtrend in North American markets. It saw a cup and handle formation in the US markets and an inverted head and shoulders on the TSX. These two patterns developing in early December gave me confidence to expect a break in trend which happened just before Christmas. We got our continuation pattern and now markets are set to rock and roll and break out to multi-year highs.
This is an atypical bull market – It’s An End of the World Bull
These markets will continue to grind higher and climb that wall of worry. This is a bull market to end all bull markets in 2012 and this is one run you don’t want to miss out on. 1,500 on the S&P is a reality and I would be surprised if the SPX doesn’t break that number by Q4 or Q1 of 2013. It’s the type of market where you put any and all extra cash at work. Put a second mortgage on the house, sell your kids, rent out your wife… do anything and everything to get as much cash in this market. Did I just say rent out your wife? Yes. Conditions and setups like these don’t happen too often, so do anything you can to get invested with as many dollars as you can and stay invested in this market all year. Once the SPX 500 breaks out of current 1350 – 75 resistance, 1,500 is my target. It’s what I am calling an End of the World Bull.
It wouldn’t be the end of the world without an end of the world bull… Would it?
When Armageddon comes in an end of the world bull… you want guns (technology metals), gold (copper, silver, platinum, palladium) and groceries (potash and phosphates.)
It’s an end of the world bull and in this type of market you can buy any ‘ol’ $0.03 or $0.05 stock and you will line your pockets with cash.
Christopher Skidmore
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