Small Business Outlook
Summary:
·
Yesterday, I stated that the market would be
choppy until the FOMC minutes were released.
Depending on your timeframe, I was right. The market opened up flat, moved up for 20 minutes,
then down sharply, then immediate reversal to new highs, then chopped until the
FOMC minutes were released. Then the
market went down as the investors digested what they said. Then it went up. then it chopped. Or in other words, "I can't make up my
mind" kind of day.
·
For what it is worth, the FOMC meeting minutes
had nothing (in my opinion) that was news to move the market one way or
another. The most notable information
was that there was pretty much consensus that investors are displaying too much
complacency with regard to risks in the equity and treasury markets.
·
Gold spiked on the minutes, and that may mean
that some investors think the Federal Reserve is not paying attention to
inflation as they should.
·
I tell everyone I can. The issue the USA, Japan and Europe have is
debt. The USA's debt should be on every
citizen's mind. It is true many
intellectuals at the Ivy League schools don't believe that debt is a problem
that will overhang the USA citizens for many years.
They believe we should just keep buying stocks and forget about the
debt. Certainly our leaders (both
Republicans (except the Tea Party) and Democrats) are very good at forgetting
the debt.
·
Today, the European stock market is
"tanking", and the US futures market is poised to follow along. The rout in Europe is due to a big bank in Portugal
not meeting its bond payments, and the financial sector in Europe (specifically
banks) are being hit hard. The DOW futures front month futures contract is
suggesting a opening of between -145 to -170 right out of the gate. Espirito Santo Financial announced it has
suspended trading in its shares and bonds due to exposure to E.S.
International. This is where debt is
going to bite Europe big time (assuming this falls over into Spain and
Italy). The European Central Bank has
accomplished little to nothing to break the bank-sovereign debt link. The problem at ESI immediately hit all
sovereign debt with a flight to safety in German Bund. Right now Europe will have to contend with
contagion as Europe's shares tumble, then finance and travel sector falling
faster than the general markets. No
surprise, Spain's and Italy's markets are the worst performers. There was no good news from the Industrial
Production data as France, Italian, Dutch and others are down. There is no recovery apparent.
·
Look for the market to open down. All eyes will be on Europe. Volatility will hit with a vengeance today. The Central Planners in Europe are very close
to losing control, and that contagion can easily affect the equity market here
in the USA and Canada.
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