Markets: What I Watch For and Why

Prior to the commencement of the huge 2008 equity market correction, a rising oil price often meant falling stock prices, because energy cost escalation choked off profits. Oil price up, equity markets down, and visa versa.

In 2008, the first downleg of the bear market meltdown was signalled by coincident price declines for both stocks and oil. Stocks and oil tracked one another through the 2009 low and continue to do so today, suggesting that in a weak economy oil price changes from these levels are not critical.

Since the 2008 bear market began and throughout the recent reactionary recovery, the U.S. dollar has acted as a counterweight, mitigating both losses and gains for foreign investors in the U.S.

What would it take to launch a second bear market downleg in this timeframe? Here is what I am closely watching: Right now we appear to be entering a short term corrective phase for both U.S. stocks and the price of oil. What if a further correction got underway in earnest, and this time the U.S. dollar failed to recover to mitigate market loses? If the dollar fails to act as a counterweight, foreign losses will spiral.

Markets and oil down – U.S. dollar up – no problem.

Markets, oil and the dollar all down together – a recipe for disaster. Tomorrow? Maybe not, but the printing presses at the U.S. mint are running out of control, after Americans voted to take the easy way out. There’s nobody home to arrest the carnage. It’s only a matter of time.

Ex-cuse me.... Do I look like an idiot?

Canadian bank earnings reports are all fantastic “ex-items”. Wow!! U.S. bank and broker earnings were all amazing.... “ex-items”....

Strange – because we were told that all of these bankers and brokers were “on the ropes” only months ago – and heaven knows NOBODY is doing any business anywhere today, so where is the hook?? Why the fantastic earnings reports?

It’s not that difficult really – look back at my first sentence in this blog and you will find the phrase “ex-items”

Read “ex-items” as “off balance sheet” or “fantasy”. You, the shareholder, are no longer party to the truth about the company you own.

You are given the “ex-items” version, or the “fantasy” calculation. How about “ex-truth”???

Beating A Dead Horse?

A bright market observer recently asked: “Why rob a bank when you can buy it?” I had asked a related question: “Can we expect the people who robbed the bank to bring bank robbers to justice?”

Very few faces have changed on Wall Street since the Subprime Mega Travesty came to light. Most of the brokers, bankers, analysts, Treasury and FOMC officials, regulators, auditors and rating agency Czars (I love this abuse of language) are still in place.

How can we expect the very people who failed to warn us about the subprime mess to fix the problem? Somewhere, there are individuals who caused the meltdown hidden among the ranks of those who are in charge today.

Bailouts? Six trillion dollars and rising fast. Are the subprime thieves now in control of the printing press at the U.S. mint? If so, they will keep on printing money until the world’s most respected currency has no value whatsoever.

You say this is impossible? Perhaps so, but I think that as I write, you (the tax payer) are being asked to anti-up another $2 trillion. Pay attention. I could be right.



Note: Take a moment to ferret out the real meaning of the word “czar”.

Bestsellers List

The book by D. Grant Sirola, November Years: Reflections on Aging, made it to the McNally Robinson Bestsellers list for non-fiction.

November Years Book Signing Event

The McNally Robinson Booksellers Event for the book November Years, Reflections on Aging, by D. Grant Sirola, was well received.