It was Christmas in July yesterday, statistically speaking. Jobless claims fell last month, private businesses hired more workers than had been expected, and retail activity picked up enough to get vendors talking about reining in discounts. Wouldn’t that be swell for them! By the time actual Christmas rolls around, we could all be paying retail – retail! – for all kinds of great stuff, putting America back on track for the kind of sustained recovery that might last until, oh, maybe early January. One thing’s for sure: Shoppers won’t have much trouble binging beyond their means if they’ve been getting the same offers from the banks that we have recently. Balance transfer loans at rates under 2% now seem to be the norm, even though it wasn’t too long ago that the fees were more in line with what Frankie the Camel charges guys who are keen on preserving their kneecaps.
Kneecaps were not even a distant concern on Wall Street. Ebullient as ever and wildly oblivious to the discouraging word, speculators greeted the news by embracing risk as though tomorrow would never arrive. The Dow Industrial Average was up more than 120 points shortly before the close, and although it sold off slightly in the final moments, shares looked poised for yet another risk-embracing spree into week’s end. At the bell, the blue chip average had gained nearly half of the 900 points we predicted here on June 30. Speculators’ devil-may-care lunge for shares was especially impressive given that the price of oil — and therefore the future price of nearly everything else – was in a steep climb, extending a rally that in less than two weeks has tacked $10 onto the price of a barrel. That can add up in a world that consumes 80 million barrels of the stuff each day, but at least on The Street yesterday no one was doing the math. We certainly hope they aren’t counting on the $99.68 price target we disseminated yesterday to stop the energy rally cold. August crude did indeed surge to within 26 cents of our Hidden Pivot target, but if quotes should pop only slightly above it, hitting $100.40, we’d warn bears to dive for cover. (Want to learn how to calculate your own targets so that you don’t have to be confused by “experts”? Click here for information about the upcoming Hidden Pivot webinar.)
We also hope it wasn’t optimism about a budget accord that drove investors into a frenzy. Come to think of it, maybe they were rightfully optimistic that politics-as-usual would prevail, visiting only token tax hikes and spending cuts on a tapped-out America? We’ll lay 5-to-1 that the U.S. debt limit somehow gets raised, but let’s not hold our breath for any meaningful changes in taxes or spending. For Pelosi, Social Security and Medicare are off the table, while for Boehner, it is talk of raising taxes that lies beyond the pale. While it would be lovely to think the stalemate might short-circuit the legislative process altogether for a few months, a do-nothing Congress that does even less than it’s doing now is just wishful thinking.
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Sammy,
Enlightened self interest is not being selfish, it is called survival.
We did not finally lose an ongoing 600 year battle with the Gauls/Goths/Germans like Rome did from 300 BC to 300 AD.
The wealth of the USA was given away in 30 years by traitors in corporate boardrooms with the aid of bought and paid for politicians in DC through “Trade Agreements” and the repeal of the Glass Steagal Act. Illegal immigration was condoned until it is such a huge problem that now “nothing can be done but Amnesty”. The Fed created vast amounts of “money” out of thin air in that same 30 year period to run up the cost of everything by a factor of ten while real wages remained stagnant. Then the coup de grace was applied by one last orgy of war spending and TARP theft. Complete with plane loads of $100 bills on pallets that were stolen, they are that bold. What happened to the USA was not the slow, inevitable process of decline. It was a well planned coup d’etat. I am in the habit of visiting political and financial blogs from the far left to the far right and everything in between. I can say that an understanding of what has been pulled off is slowly dawning on everyone, and I see no evidence of anyone outside MSM and the DC establishment supporting those in power. Too late now to stop it all, of course.
If I have managed to do alright by myself in the past 30 years, doesn’t mean I feel any sense of victory. For whom the bell tolls and all that.