Although yesterday’s selloff wasn’t quite ugly enough to write home about, only a fool would dismiss the possibility that the next selloff will be. We checked the Wall Street Journal’s online edition to determine the cause of the Dow’s 268-point plunge, but there wasn’t much to persuade us. A headline attributed the selling to “Global Fears” about the economy, plus some previously well-exposed worries about euroland’s sovereign debt. But weren’t there headlines in the same newspaper just days ago trumpeting the U.S. economy’s red-hot economic growth for Q4? Actually, looking back at a whole week’s worth of Wall Street Journal headlines, readers might have inferred that, Toyota aside, the entire economic world was exploding with rapacious vines and tendrils of growth, not mere green shoots.
Oh well. Perhaps traders all woke up on the wrong side of the bed? Or maybe Mercury was in retrogade. (Isn’t it always?) Whatever the case, the major bourses got socked with their biggest losses in recent months. “Throughout the day,” the Journal reported, “investor [sic] fretted over signs that Europe’s governments are struggling to finance their debts and that America’s employment picture may not be improving as much as expected.” Ah, those fretful Europeans! Fey as always, they could probably learn some useful lessons from Americans these days. For one, they need to get over the silly notion that financing their debts might require a struggle. With the national debt now above $14 trillion and continuing to climb, do we appear to be struggling? Hell no! In point of fact, not one worker in America has paid even a dime of extra taxes – not yet, at least – to help whittle down that debt.
No Psoriasis
As for the Government’s ongoing financing needs, when foreign buyers stopped coming to Treasury auctions, did we break out with psoriasis? Not hardly. The steroid-enhanced sluggers at the Fed stepped up to the plate and came through in the clutch, monetizing a reported 80% of everything Treasury threw their way. Contrast America’s cool about such things with the helpless dithering of this euro-worrywart, a big-time money manager: “You really do have to ask the question, what is the purpose of government bonds in my portfolio? If their purpose is to be the low-risk asset, what do we do if we don’t see them as low-risk and there aren’t yields to compensate us for that?” Get with the program, buddy! Here in the U.S. of A, they’re lining up around the block, so to speak, to buy government debt that is yielding practically nothing.
In the flux of economic news yesterday, there was a ray of truth concerning the dollar’s “strength”. Turns out, the U.S. dollar looks strong only in comparison to other currencies less popular at the moment than Confederate money. The euro, for instance. “Anyone who thought the euro was going to be the next reserve currency has got to be questioning that this week,” said Duncan Richardson, executive vice president at Eaton Vance Management in Boston. “It’s not ready for prime time yet.” Does Richardson mean to imply that the euro’s day will come? If so, we have a hard time imagining what, other than alchemy, could bring that about.
(If you’d like to have Rick’s Picks commentary delivered free each day to your e-mail box, click here.)
Hey Rick, Impossible for the market to have dropped on friday from a retrograde mercury as mercury came out of retrograde on January 15 and was fully out of the retrograde effects by January 18!! It won’t be back in retrograde until between April 18 and May 12 of this spring.
&&&&&&
Thanks, Robert. I was kidding, of course. But sometimes it just seems as though Mercury has gotten stuck in retrograde. RA