“It was the best of times, it was the worst of times …” Arguably, this is the most interesting opening line of any novel in western literature. It popped into my head this morning as I read through my news, and I watched the market go from green to red right after the official announcement that Greece had reached a deal on its new austerity measures, measures demanded by the “troika” in order to receive the next tranche of its needed bailout. As the market flipped on the “good” news, I thought, “Wow! This really is a tale of two markets,” and that is why Charles Dickens’ opening line popped into my head. Okay, so maybe it didn’t happen exactly like that, but I did think the market would pop on the news and it didn’t – it did the exact opposite, which did make me think the market sees the world through the bipolar lens of “best and worst.” Enough musings for now. The clock is ticking before I am “leaving on a jet plan” to Spain, where I will get a first-hand look at the worst of times for that country and Europe …
Speaking of worst … Wounded animals with no escape are the most dangerous. They will do anything to protect themselves. Iran is a wounded animal, and the world is continuing to stick it with biting sanctions and more are to come. Make no mistake, this is a dangerous situation.
New U.S. financial sanctions … are playing havoc with Iran’s ability to buy imports and receive payment for its oil exports. The ultimate hammer blow to Iran’s economy could come in the next few months if it becomes unable to sell the 2.6 million barrels of oil a day that it is accustomed to exporting, or is forced to offer such steep discounts that its revenue shrivels.
And speaking of the best, the U.S. labor picture continues to look better …
The four-week moving average for new claims, seen as a better measure of labor market trends, fell 11,000 to 366,250 – the lowest level since April 200.
And a poll of my home-state residents says two-thirds of us believe our personal financial situation will improve in the next 12 months. Given California is the 8th largest economy on the planet ($1.8 trillion [Greece, $300 billion]), this bolds well for confidence in the U.S. economy.
And just in case anyone thought my rosy eye has disappeared, let me assure you it has not. The deal in Greece today is another step toward resolution, and it makes it more likely the EU accord will get done by March 1, and that makes it more likely, the ECB will keep loosening its purse strings, a necessary part of building a firewall around the smoldering embers that could explode into a raging fire if not contained. The containment strategy is still working.
Meeting the same day in Frankfurt, Germany, the European Central Bank is expected to trumpet the advantages of its second unlimited offering of cheap, three-year loans to be allotted to banks on Feb. 29.
Maybe it’s the excitement of going to Spain that is making me feel good, or maybe the market turning back toward green is the reason, or maybe, just maybe, I am one of those flaky, tofu-sprouts-yogurt eating Californians who believes we will be financially better off in the next 12 months. Then again, perhaps the worst of times is slowly falling behind and the best of times is just beginning to emerge. Me thinks the market wants to believe the latter, but it just can’t quite get there, not just yet anyway.
Trade in the day – Invest in your life …
