Friends
Even though we all have our minds on the anniversary of 9/11, and one would think that President Obama’s speech last night would dictate the direction of the market, the drop in stocks today was directly attributed to the mess in Europe. We had a member of the ECB resigning and Greece circling the drain. I can get you a nice two year Greek bond with a 65% yield if you are interested. Look, as we have continued to point out, the problems in Greece and other Europeans countries have to be dealt with, and default seems to be the only logical outcome. Greek bonds are already trading as if they are in default. We have said that Europe needs its “Lehman” moment and it may be coming any day. Good, let’s get on with it. It’s time for the Euro’s to “tarp” their banks and stop throwing money at an insolvent situation in broke countries.
Stocks had an awful day, as traders simply did not want to buy anything going into this weekend. No one knows what might come out of the G7 meetings and are simply afraid to walk into a storm on Monday morning. The Dow Jones Industrial Average was down 303 points, while the S&P 500 fell 31 points to close at 1154. We continue to trade in a defined range of about 1140 to 1200. Unfortunately, it’s not about the performance of U. S. Corporations right now. We are held hostage to the developments in Europe on a day to day basis. When things are quiet in Europe, our stocks tend to rise, and on days when the European situation ignites, our stocks fall. Of course, our situation here at home is nothing to crow about, but the facts is, it becomes secondary when Europe raises its ugly head.
After being up nicely yesterday and early this morning, gold slipped a little this afternoon to end the day almost flat to finish near the $1859 level. Oil slipped back a couple of dollars to end the day slightly above $87 per barrel.
We still think a test of the August lows is likely, but we are somewhat encouraged that we are still holding above the 1140 level on the S&P 500. Again, if we can make slightly higher lows each time down, that would be constructive. Of course, the global macro situation could change the playing field either way early next week.
Have a nice weekend everyone and make sure to remember those who perished on 9/11. We should never forget.
