News is largely what it was: The European zone continues to experience challenges, the latest being a Fitch discussion of downgrade to UK. It is largely believed that Greece will sooner or later default, and the whole sustainability of the Euro is somewhat believed to be limited.
On the domestic front, the US economic signs are not as “hot” as were first portrayed: We’re still in a period of recovery (for however long that lasts) but it is much slower than first portrayed. (And I’ve been saying here a number of times to be cautious of the motivated Governmentally-generated economic reports.) Bernanke, this morning, warned that unemployment will remain “high for awhile.”
The Obama administration is beginning to slow the rate of debt sales, and this is a good thing. In my opinion, debt levels are still way too high (even with the understanding that the economy requires a stimulus — not THE Stimulus, but a stimulus — to get a kick start.) But it’s a good sign that the speed with which we are careening toward the cliff, is at least slowing a bit. This week’s $70 billion sale of notes and bonds marks the biggest drop in the total sale amount for comparable securities since the credit crisis began. But prior to this we were selling about $10 billion per week. All of which gives pressure to inflation.
And even so, I don’t mean to imply that the solutions are simple: Even in the face of all of this, the current scuttlebutt is that we are at risk for deflation — a pretty tough situation where the entire economy grinds to a halt, as everyone waits for lower prices to come the next week and month.
And even so, the money continues to flow to the US safe haven vehicles, as we’re still perceived to be in some of the best shape of countries around the world. In a recent Bloomberg survey, almost 4 of 10 respondents picked the U.S. as the market presenting the best opportunities in the year ahead — more than double the number who said so last October.
On a personal note, look at Greece. And Spain, and Portugal, and France, and UK — who is now also about to be downgraded. I don’t mean to rock anyone’s politics; but Socialism simply does not work. It’s not like we need to argue the theory on this — there are FAR too many examples in history to show what already makes sense: If you disincent the working, you will have less work. If you incent the indolent, then your entire society will go this way. Socialism may look great in theory; but it only works in Heaven. And forced Socialism (that “redistribution” that comes from force, and not from charity) is one of the great evils of all time. We need to support the greatest political plan of all time — the US. Number one, it’s probably one of the few remaining examples; and two, it works — provided half of us don’t work to destroy the other half.
Technically, we are in a bullish phase (bonds/notes up; interest yields and rates, down.) With a stochastic crossover, we may see a rally down to below 3%. I would not lock today, pending other global/domestic news.
