January 16, 2012
Weekly Market Outlook
By Keith Schneider
Ever since the French Revolution began in 1789, a time when the aristocracy lost its glamour and Marie lost her head, the French masses have steadily improved their standard of living. These days, mandatory paid vacation time in France (and many other euro zone countries) amounts to almost 6 weeks per year. In my casual comparison, this looks quite favorable to what we have here in the US where the number is zero. The average Frenchman indeed lives pretty well. and in comparison to the overworked US workers (those who are gainfully employed) lives, well, like a king. So it’s no surprise that these problems are coming home to roost. The Euro is getting crushed, trading at its lowest levels since mid-2010. The sovereign debt downgrade of just about all of the Euro’s major members, with the exception of hyperinflation sensitive Germany, is not surprising considering these unfunded entitlements. Although the Euro is a bit extended versus the dollar short term, most Euro zone countries have serious structural problems to deal with, even more so than ours at home. We can thank the French and their revolution for ushering in social equality and the current sovereign indebtedness. Speaking of structural issues, President Obama has actually started a debate about reducing our bloated military budget (664 billion plus last year) and making our forces more efficient. Could a real discussion and debate about reducing our own spending issues be underway? If so, longer term the Euro could be headed back to par with the greenback. Warren Buffet, the world’s third richest man, believes the US is headed for the great rebound, not the trash heap of economic history.
Also noteworthy, is how well the US equity market rebounded after getting hit on the downgrade news. Coming out of gate up for 2012, we are positive almost 2-4% in the key equity Indexes but the market internals leave a bit to be desired. Most Elliot Wave and Cycle watchers are pointing to a big move down, but are leaving room for another big rally before that happens, so what’s a trader to do? Let’s go to this week’s Video...
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