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You have to hand it to the «Don’t Worry, Be Happy» crowd on Wall Street. No one sings «Happy Days Are Here Again» better than they do (and the eternal bull Larry Kudlow on CNBC-TV should win their «Best Vocalist» award). The current euphoria on Wall Street goes like this. Bush win =15,000 Dow Jones Industrial Average. Triple ballooning deficits, swooning currency, a far from peaceful Iraq and a U.S. employment picture that is built on sand versus cement, doesn’t matter JUST BUY STOCKS (because Larry said so). Please allow me to make a few points of interest before you follow the Pied Piper of TOUT-TV. DEFICITS DO MATTER — Larry and the boys may downplay them, but minimizing their importance is committing financial suicide. There will come a time when foreign investment flows are going to want higher interest rates and/or a stronger U.S. dollar in order to keep justifying their capital being our lifeline. I believe we have already seen some balking on their part and that’s why the U.S. dollar is hitting new lows. Iraq Is Not Home Free — The latest military results may look good on TV, but what fragile peace among the majority of Iraqis existed is disappearing in the Sunni Muslim heartland. We truly may have won the battle but lost the war. Employment Numbers Were Goosed — Creative gathering of statistics has been an «art form» for a while now and the latest employment numbers were no different. We may get away with it during the upcoming holiday period (bah-humbug to anyone who talks about unemployment during the holidays), but the reality of a very fragile economic expansion should come to light in the New Year. The 1929 stock market crash came at the beginning of one of the worst economic times in all of U.S. history. Most don’t know or care that the market managed to make up all the losses suffered in the crash (and then some), only to slide back past the point first hit in the crash. It took over 25 years for the market as a whole to get back to even. Serious caution is advised to all those who can’t mentally and financially afford a similar time frame. Will $440 Gold End The Stealth Bull Market? Up until now, the mainstream financial media has not given much coverage (thankfully) to the nearly 3-year-old bull market in gold. This weekend’s «Up & Down Wall Street» column in Barron’s may have signaled the stealth part is over by not only giving gold two whole paragraphs, but by ending its commentary by stating «…All in all, a gold hedge makes more sense than ever…» There’s a correction somewhere near. This bull market has been built on two steps forward and one step back movements. From time to time, gold suffers a $10 — $20 sharp sell-off, only to make up that loss and then some in shorter and shorter time frames. Having just returned from speaking at the infamous New Orleans Show, the question I received most was, «When will the gold market peak?» I could give you a long drawn out explanation but instead have chosen to be somewhat sarcastic but very serious in my response. When TOUT-TV puts up a gold ticker box all day on the screen, and their NASDAQ market reporter is broadcasting live from the Comex on a regular basis… but not before! No financial medium has been a better signal. Quick note on oil Believe it or not, the fact that TOUT-TV placed an oil ticker box on their screen was a clue that oil was reaching its top. But isn’t it funny that when we were hitting $46 a barrel for the first time, it was bad. But now that we are after being at $55, it’s a good thing. I believe oil has hit its cyclical high and its retreat will be orderly, but not back to levels that remove the energy crisis from the overall picture. Third party statements contained herein and information contained in any source cited herein are not endorsed by or adopted by Grandich Publications, LLC, nor has their accuracy been verified by Grandich Publications, LLC.
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