Italy’s senate approved a series of austerity measures on Friday. Investors were obviously pleased given that their 10 year bond rates continue to drop from a peak of 7.25% down to 6.45% in just two days. And this movement back from the brink = stocks up in Europe = stocks up in the US.
Unfortunately that is in the past. And it will not help us navigate the market next week. That is because for every problem solved, a new one emerges. Like...
“Core” Euro nations are contemplating a breakup of the EU
Slovenian bond rates cracked 7% intraday on Friday.
Spain’s GDP fell to 0%. Not good with 20%+ unemployment and staggering debt load.
French bond rates are steadily rising too.
Italian bond rates can ratchet back up as fast as they came down.
Yes, it’s not a pretty picture. And the market advances the last two days does not prove anything about what is to come.
On the home front we got a nice spike in the Consumer Sentiment Report. As we talked about in the past, consumer sentiment pulled away from economic reality. So after hitting depressed levels, sentiment is leaping higher. The reading of 64.2 is still well below the 70+ readings of the spring, but it’s the 3rd straight month of improvement. The trend is our friend in this regard. Europe is not though. And that is what matters most now.
Here is the economic calendar for the week ahead.
24/7 Europe
Tuesday: PPI, Retail Sales, Empire State Mfg.
Wednesday: CPI, Industrial Production
Thursday: Jobless Claims, Philly Fed Survey
Given the whip-sawing action in Europe, I do not yet feel confident in moving away from our net neutral portfolio strategy. That’s because there are landmines on either side of the equation. Meaning if you step too bullish or too bearish you could be dead meat.
This is a time when “Discretion is the better part of valor”. |
发表于 2011-11-13 09:00
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