They famously do not ring a bell at the bottom, but I think Friday’s selloff came close. First of all, Fridays are scary,e ven if they are not Friday the 13th, which comes on Sunday this year. Facin a weekend when markets are volatile means the safest option is to just sell hard.
There was ultimately no good big bad reason for the perilous market drop Friday except that it was Friday. Yes, we are in a jobless recovery; so what else is new? But the gossip about Société Générale being in trouble was probably a miscue from the pending beginning of the trial of Jerôme Kerviel, the man who broke the bank 3 years ago.
As for Hungary, which gave the world both Houdini and George Soros, its newly-elected Fisdusz govt decided to blame its predicessor socialist coalition for everything that had gone wrong and could go wrong.
Anyway, for the record, Hungaray has a current account surplus. It has a $20 bn finance deal from the International Monetary Fund it can draw down. It has a 4-4.5% governenment deficit. It is nowhere like Greece except in one particular: it is a small peripheral European country in a political bind.
What terrifies me today is that the Cameron Tory government of the UK is taking a leaf from Hungary PM Viktor Urban’s playbook, talking up the mess left by the prior Labour govt.I expect better from a traditional and experienced leader in the Mother of Parliaments.
It is not often appreicated how mature Barack Obama was on taking office from W, for not overstating the perils of our own economy. One reason he faces so much animus from diehard deficit hawks and zealots for regulatory innovation is that he did not take advantage of the opportunity to blame the Bush lot for the mess he inherirted. Rather than reject the old administration tactics for dealing with the economic crisis, he stressed continuity in the way the government dealt with it, and even kept on many of the same officials.
While we are on the subject of recovery, Portugal today not only married its first gay couple (of lesbians.) It also reported a 1% rise in Q1 GNP, making it one of the fastest growers in sluggish Europe. It has imposed a healthy dose of privatization and restraint on its state sector and will boost revenues from these measures by 3.7% this year, cutting its budget deficit. In any event, the Portuguese company I recommend is very international and unlikely to suffer any consequences from being Lusitanian.
All of which leads me to boldly forecast that the market is seriously oversold and that the time has come to get back in. But to do so carefully.
Do not rush to buyBPshares. I can’t believe that Wall Street seems to be focussing on how to play British Peterleum, a pure gamble.. The dividend is not safe; the US sub may have to sell its crown jewels (in Alaska); it is being squeezed out of Siberian oilfields (a matter barely noticed given the world’s focus on the Deepwater Horizon disaster); management is in disarray; the company’s image (and sales) are at risk; and if bought out may not pay current owners a premium. More for paid subscribers from France, Switzerland, Finland, Germany, Sweden, South Africa (non-World Cup related), Britain, and Israel follows.
