Movable Feast

Among the interesting events to take place over the festive season was a mass conversion, it seems, of investors to the optimists' camp. Sensing that a slab of rock was being removed from the entrance to a tomb, the writer quickly consulted his calendar to assure himself that it was, in fact, Christmas, and not the Easter that seems to be the consensus opinion concerning the event being celebrated. Of course, Wall Street enlisted far more adepts and true believers from the ranks of particle physicists than it did from the semiotics departments of the Ivy League.

Aside from revealing the fact that the writer was, when tested 40 years ago, outstandingly mediocre at mathematics but way out on the right tail when it came to literary comprehension, the truth is that we are less than totally convinced that the S&P will break 1000 by month's end - as appear to be some 20% of respondents to Macro Man's poll - or even that it will find itself losing a maximum of 3 percent, as seem to believe some 60% of those that took the trouble to vote. Then again, there would be an acceptable symmetry if all those that went long on the basis of exaggeratedly unbalanced negative sentiment in the diminishing light of October were to get their revenge in January.

Among the items which continue to concern us are:

1). The recent considerable loosening of credit markets will certainly save many corporations from the fate of not being able to meet operating obligations. But will it cause them to suddenly start making money?;

2). The quintessential one-trick Spanish bubble economy, as Edward Hugh rightly has been pointing out for some time, seems to be hurtling headlong towards price deflation. The most recent report (still subject to revision) has year on year CPI at a skimpy 1.5% - a year ago, Spain headed euroland with regard to this statistic. The degree to which the reader might think this either a mere special case or a coalmine canary would determine what he or she thought were the probability of a recuperation of consumer spending over the near term;

3). We, for no concrete reason, have a hard time believing that all the bad news concerning the banking sector anywhere is out, although we are not sure that new lows will be made;

4). The birth of Christ, beyond being the sine qua non of the tale that was to follow, is essentially irrelevant to western story telling. Easter, on the other hand, is so fundamental that it makes appearances at any and all perceived conjunctures, regardless of season or reason.

Perhaps Trevor could be convinced to key up a Northrop Frye plug-in for our charting program.

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