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Sunday, December 30, 2012

Market Thought... a standing ovation for doing nothing

Turns our Boehner got a standing ovation from House republicans. Awesome to know other members of the house have their heads so far up each other's asses that they completely lack the pulse of the people they are serving. A standing ovation for doing nothing! Nothing.

I am all for a great debate, but for fuck sake, when its time to act, act.

With the continued stupidity, like standing ovations for 'nothingness', the republican party will push their own worst-case scenario: the inability to stop the democrats in 2014.


The markets are looking pretty good to me. Fear has spiked, yet the index is holding up fairly well.

The technicals suggest the fear is near its high. Obviously the market's current situation is driven by politicians (that would rather applaud the act of jerking-off vs dating the prom queen), so any technical assessment is pretty pointless.

Regardless of politicians, the fundamentals always matter.  By the end of Q4, the SP500 is projected to produce a yearly eps of $98-99. Slap a 13-15 trailing multiple on the eps, and the SP500 can potentially trade between 1300-1500.  However, if certain conditions can be maintained, the SP500 my start to trade with a trailing multiple above 15 (for the first time in years). The conditions include:

1. alleviating the cliff concern.

2. alleviating a debt ceiling (US debt default concern) in Feb. (I can give a rats ass about any other rating agency down grade of US debt. The concept of these rating agencies is bullshit.)

3. ECB continues to stabilize the EU banks.

4. US jobs data continues to be strong. (This also suggests the US and Global economy remains relatively robust, along with corporate profits.)

If the above are in check, and China keeps avoiding a hard landing, I do not see why the market will trade with a trailing multiple below 15.  We should start to see a rotation from bond funds into equities, and an increase in multiples. The SP500 may start to trade with a trailing multiple above 15.

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