Search This Blog

Friday, March 25, 2011

Market Thought... re-assess

Lets re-examine the main market catalysts.

1. Corporate profits.

If Oracle, Accenture, Red Hat, Jefferies and others are an indication of what is to come, their is fuel to push the markets higher.

2. Civil unrest with a major oil producer.

Everyone should want and fight for greater liberty and opportunity, but if it happens in a major oil producing country, the result is obvious. Not all civil unrest is created equally. They all do not have to end up like Libya or even the relatively peaceful transition in Egypt.  Transitions can happen. The greatest example is probably Great Britain. An absolute monarchy peacefully transitioned to a democratic system.  Hopefully Saudi Arabia is on that track.

Current heightened unrest reside in: Libya, Syria, Yemen and Bahrain to name a few. There are some messed up government actions happening there, but the biggest economic threat between the group is Libya, and even they do not merit a significant economic reaction.

3. Japan.

Talk about the mother of 'fucked up scenarios'. Before Japan, on March 11th I posted about the expectation of enacting the no-fly zone in Libya, and that would act as a catalyst for market upside unless a 'wild card' fucked everything up. Well, a threat of a nuclear meltdown with the threat of a quarter of the island to be deemed uninhabitable, caused so much confusion that we all witnessed the ultimate cluster fuck of professionals acting like babies that added to the confusion.

Things are improving, but obviously still messed up. (So if you didn't already, or have extra profits from this past week, visit :)

Mid-to-longer term, Japan is still a wild card. Many will tout Japan's horrible finances, that will limit their ability to recover. (an example from an individual I pay attention to, Mohamed A. El-Erian) I disagree with the premise for a few reasons. Japan's debt burden is overwhelmingly held by its own people.  I believe only some 5% of its debt is held by foreign investors. And if the tragedy has showed us anything, was that the Japanese have the will to do what it takes to overcome. If that means higher taxes, the people can handle it and will deal with it.

4. Europe.

The funds allocated to provide stabilization to the PIGS appears to be working, and the individual countries are slowly but surely reforming. (Albeit, with some kicking and screaming, but its happening.)

Basically, the market is approaching the wait and see mode.  Will profits rise? (I think they will continue to rise as indicated above.) Then the markets will continue to push forward. Will the rebels take Libya? Now with the no fly zone, the chances have significantly improved, and with their promise to maintain all standing oil contracts, then oil prices crumble below 90 quickly.  Markets will rise.  In the mean time, we maybe chillen at the previous channel.

All of the sudden the talking heads, with all their ambiguity and reluctance to commit to a decision are no longer as negative. (And I see they are talking as if 'they' were the ones that had the level heads. I just laugh.)  It is moments like these I am happy I blog and have a real time perspective and handling of the events that unfolded.

No comments:

Post a Comment