He we go again, another week of … chaos Well, perhaps, but at some point either the economic powers-that-be will stop Europe’s immediate bleeding, or they won’t. My bet is still on the former, but we will see. In the meantime, I want to focus on some positive reasons why the stock market should go up, given the fundamentals, that is. So every day over the next five days, I will give you a fundamental reason that supports my thinking …
Despite the constant shouting of the breathless media, the U.S. GDP is not breaking down. In fact, it is actually rising, and has been all year, right in the face of both the horrific problems that have beset the global and U.S. economy and the breathless media that loves to find anyone who will espouse their marketing tag, “Be afraid. Be very afraid.” So, here are the numbers, and they are impressive all lined up together. They show real, solid growth.
Q1 +0.4% — Q2 +1.3% — Q3 +2.5%
The above is reason one for this week. The rest will come over the next four days. In this moment, though, I have two good questions from a reader, and I thank him for them.
It seems inconceivable that so many politicians and so-called financial experts have been unable to resolve the Euro-crisis so far. So, I want to ask these questions. Is there another reason behind the ups and downs of the European debates, such as complete unification of Europe rather than a disparate bunch of countries all with different agendas
Yes, I do believe you are on to something important. Because the media has conditioned us all to think only about the current topic at hand, the larger, and more important issues often become obscured. One of those is the fact that to truly resolve the now and future fiscal and monetary problems of the Eurozone as a whole, a stronger political structure is needed. Merkel and Sarkozy have said this clearly time and again, however, the immediate debt issues of the PIIGS always captures the headlines. This political restructuring will take time, as the first round of amendments to the current political structure take effect until 2013. This process is occurring simultaneously with the attempt to stop the bleeding, which must come first. So, to answer the question, part of the political problem causing much of the volatility is the internecine fighting between countries about what this more unifying political structure will look like.
Who is profiteering from this seesaw volatility Is it the banks and some Hedge Funds and is this the real reason for the lack of decision and confused agreements coming from Europe and, yes, the Obama Administration too.
Yes, hedge funds and anyone else who bets correctly are profiting, and “No” profiteering is not the real reason for the confusion and foot dragging. The reason is as stated above – greater political unification among countries with long, independent histories is slogging work that takes time, political pain, and nation-centric sacrifice.
Trade in the day – Invest in your life …
