Shakespeare covered all the drama of human existence in his writings. He spent a fair amount of ink on comedy, as well. Sometimes he did both in the same piece. He could and did the latter because life often offers up both drama and comedy as two important pieces of a flowing story.
Sometimes, the market behaves dramatically and, sometimes, if one looks at what is happening, one has to laugh. Rarely, though, do market drama and market comedy flow together. More likely, it is one or the other on any given day. However, in the longer flow of the story, one can look back and, over time, see the weave of both comedy and drama throughout the story.
Since 2009, we have seen much drama and some comedy from the market, but as Gloucester says in Shakespeare’s tale of King Richard III, “Now is the winter of our discontent.” His soliloquy clearly suggests that the worst of war is behind the kingdom. I would follow that with my own short speech – the worst of the Great Collapse is behind the market.
Clearly, the drama of a double-dip recession in the US has ended, and the early clarion calls about the Fed’s policy of QE burying the US economy in hyperinflation have faded. The big banks did not falter again, as many predicted, and Dodd-Frank has not killed them either. The US consumer, often left for dead, did not die; rather that resilient being dismayed the doomsayers and kept the slow but steady economic growth moving forward.
Political theater about the US debt has subsided. The European financial crisis of epic proportions has melted into debilitating recession. China’s economic demise is now discussed as China’s necessary economic reform, and Japan has risen, like the Phoenix, from the ashes of stagflation and it is threatening to once again be a power in the global economy. All of this has turned the market up, down, and sideways for some four years now.
Yet, the market’s story regarding its recovery since 2009 is not over. Clearly, unemployment is still an issue for the American consumer. The Fed still needs to actually begin unwinding QE. The US housing recovery is threatening to become another bubble and Europe is still trying to emerge from the depths of serious recession.
Despite the above, though, I do not see any of that stopping the market from moving forward strongly right through the end of the year, now that the annual Spring Swoon has ended. In fact, this is turning out to be the beginning of a beautiful summer for the market.
- Spain’s unemployment rate fell for the first time in two years and some of the country’s biggest firms said on Thursday business was looking up, boosting the government’s claim the economy is climbing out of recession.
- Britain’s economy sped up between April and June on the back of stronger spending by consumers and businesses.
Europe still has a long way to go, but Spain’s and Britain’s tiny improvements, along with the better than expected PMI numbers just released, offers hope that the massive EU economy will continue its nascent recovery this year. As to the US, well, for all those who predicted, again, that the numbers from March and April suggested reversing momentum in the US economy, please consider the following, along with all of the other recent economic data that is good.
- The Commerce Department said on Thursday non-defense, capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 0.7 percent after rising by a revised 2.2 percent in May.
- Orders for long-lasting manufactured goods jumped 4.2 percent as demand for goods ranging from aircraft to machinery improved. Orders for these goods, which range from toasters to aircraft, had increased by a revised 5.2 percent in May.
So, I said that the market story over the last four years is a weave of both comedy and drama, yet thus far, I have spoken only to the drama. The comedy is there, and has been there throughout. It is found in the constant pattern of doomsayers screaming from the hilltops, the breathless media helping those same folks get to the hilltop, the financial oracles predicting this or that, and, finally, the persistent effort to paint economists as anything other than artists. As to the latter, I will leave you with two lines, both seemingly written especially to further my plot, which is to push the idea that one learns far more from one’s effort than one learns from the effort of others.
- Orders for long-lasting manufactured goods jumped 4.2 percent. Economists polled by Reuters had expected orders for durable goods to rise only 1.3 percent after a previously reported 3.7 percent increase the prior month.
Trade in the day; Invest in your life …
