Saturday, March 13, 2010

Stock Market Review - 03/13/2010

Shoveling Manure

The economic data seem clear and unified. The economy is getting stronger a little bit at a time. At least, that's what the data says. You name it, and the statistic is better today than it was last year. The economy is losing less jobs. The stock market is up. Consumer spending is up. Banks are stronger. GDP is way up. There is no inflation. Workers' incomes are up. Heck, even home sales are supposedly up in a few cities. At least, that's what the data says. It also said on Friday that consumer confidence slipped a bit in early March. As always, the market sagged for an hour or so and then it managed to move a bit higher. For the week, there really wasn't anything that jumped out. Ho-hum. Mostly it has become apparent that the Fed does not want, nor will they tolerate, very much selling of stock without a strong response of market intervention. Therefore, we all know not to sell and certainly not to short sell.

With the game now obviously 'fixed', why would consumers be less confident? Shouldn't consumer confidence be 100 and not the reported 72? What does it mean? What does it matter? Greece is broke. Portugal is broke. Europe is broke. The US is ridiculously bankrupt. Nearly every state in the union is operating in a deficit. Congress is on the verge of passing a trillion dollar tax package they call 'health care reform'. Maybe reality is bothering the consumer.

But this is a bit like shoveling manure on the lawn. We know the manure is good fertilizer and it will help the lawn. Yet, it stinks like, well, like manure. We have to hold our nose. We stagger to the malls and we stagger to the car lots. We continue to buy stuff that we can't afford because we don't know how to do anything else. It seems to me that the consumer is more like a drunk staggering out to the car after a hard night of drinking. If we get in the car and try to drive home, something bad is likely to happen. We haven't got the car cranked yet. But the key is in the ignition. More taxes, more debt, less jobs, and less income add up to manure. We just keep shoveling. The only thing the Fed has left is the stock market. They have to keep it moving higher to keep society placated. If we all decide to call a cab, it's over. The stink will run us upwind from the lawn.

SPY 5days 03/08/10 - 03/12/10
Chart courtesy

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