Friends
“The waiting is the hardest part
Everyday you see one more card
You take it on faith, you take it to the heart
The waiting is hardest part”
So says the old Tom Petty and the Heartbreakers song. Here we wait for politicians to decide the credit worthiness of the United States of America. God help us all. It is very difficult to imagine any confidence being built when we are constantly barraged by the coming disaster that will result from not raising the debt ceiling. Curiously enough, the bond market seems to be in its own world, totally ignoring the fact that treasury securities could be downgraded by S&P and Moody’s any day now. Yields keep drifting lower and, quite frankly, the auctions this week went very well. Seems there is still a whole lot of demand for U. S. Treasury securities despite the possibility of losing their AAA status.
What does all this mean? Well, maybe the bond market is assuming that after all the political posturing, something will get done at the last minute. Maybe the treasury market is telling us that with all this uncertainty, there really is nowhere else to go. Perhaps it’s just the ultimate game of chicken. Unfortunately, most likely we get to go through all this again next week.
As for stocks, although the week was sloppy, considering the environment, I would contend that stocks have held in pretty darn well. Earnings season has begun and the highlight of the week was an amazing number from Google. In addition we got buyout bids for Clorox and Petrohawk Energy and a proposed breaking in two of oil giant Conoco. Next week we will get a number of big names reporting, so we will get a good feel for corporate earnings by next Friday.
Stocks ended the day to the upside with the Dow Jones Industrial Average finishing up 42 points. The S&P 500 finished the day at the 1316 level. On a technical basis we are watching the 1300 to 1350 range on the S&P 500, but with the goings on in Europe and our budgetary fun and games here at home, volatility will likely rule the day for the next couple of weeks. Of course, volatility often produces opportunity.
As the song says, the waiting is the hardest part.
Have a great weekend everyone. Maybe a glass of wine will help. It can’t hurt.
