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Courtesy of Scott Martindale, Sabrient Systems and Gradient Analytics
All eyes continue to be on Europe, as they begin yet another critical summit. Traders and investors have grown accustomed to being disappointed by the lack of a comprehensive solution to the European debt crisis each time the leaders convene for these summits. Perhaps we’ll be pleasantly surprised this time…but I wouldn’t count on it. Nevertheless, so long as there is positive momentum, government borrowing costs in Europe, as reflected by bond yields, should stay at manageable levels.
There are still many naysayers who have been predicting the second shoe to drop in the U.S. economy, but I have remained optimistic. The main reason is that I believe in the capitalist system and entrepreneurial spirit to find a way to prevail in the face of what seems at times to be overwhelming odds. Sometimes the fight is just too difficult, and the economy struggles for awhile. But today, that is not the case, and I think the pieces are in place for a Santa rally.
Corporate earnings are strong. Capitalism, entrepreneurism, and the consumer’s will to spend remain alive and well–despite the continual push by socialist-leaning demagogues to thwart them with the same failed policies of the past. In a noble but short-sighted effort to help the lesser-haves at the expense of the haves, they seek to redistribute slices of the pie rather than expand the size of the pie so that everyone can have a bigger piece.
It reminds me of something I recall from the 1980s. It was an interview with Yakov Smirnoff, who was a famous comedian from the old Soviet Union, known for his “What a Country!” comedy as the happy U.S. immigrant. In a more serious moment, he made a memorable point about the difference between the capitalist mentality of hope versus the communist mentality of resignation. His analogy went something like this: In the U.S., if a man’s neighbor has a goat but he has no goat of his own, he tries to figure out how he can get a goat, too…but in the Soviet…
