Tuesday, February 12, 2013

Print, Baby, Print; Dow Over 14,000 Again

The Dow topped the 14,000 mark for the first time since February 1, setting a closing high that was the best in more than five years.

Thank you, Mr. Bernanke.

There's no substitute for rampant liquidity in a market climate such as this one. Uncertainty continues to abound, the economies of the developed nations are in the proverbial toilet, circling the bowl either in recession (Europe), complete deflationary stagnation (Japan), or barely chugging along at under 2% GDP (USA).

Of late, the Japanese have embarked on "unlimited" quantitative easing (printing money with nothing at all backing it), though the US continues as king of the hill, with the world's largest sovereign economy, the Fed buying up all the rancid mortgage paper and monetizing the federal debt to the tune of $85 billion a month (a touch over $1 trillion per year, annualized).

Europe seems to be getting the message that it's finally time to play no-holds-barred currency war, though the socialists on the continent seem fairly sanguine about continuing their efforts to bail out banks and sovereigns one-by-one, a little at a time, rather than using the bazooka approach favored by Mr. Bernanke.

Sooner or later, the Europeans will devalue by printing, mostly because the high level of the Euro is crimping Germany's exports, and, if Germany's economy suffers, one can probably bet on the good people of Deutschland not being very supportive of the Euro and/or wanting more in return from their Euro-brethren to the south, who, like the American welfare caste, produce nothing, but get much in return.

So the US and other major countries will continue to print, print, print their feckless paper fiat, a time-honored practice that has never ended well, ever. In the meantime, however (and that meantime could stretch out to 2016, 2017, or beyond), one cannot fault stock investors in their search for yield. The past four years in stocks has been nothing but Fat City Easy Street to the xxxxxth degree. During the period from March 9, 2009 until the present, it's been nothing but straight up for stocks, to a point at which the general market is now sporting a 14 multiple, even though many companies are not growing earnings one whit, others making their numbers through cost-cutting and downsizing.

Global finance is in an unsustainable state, but, as long as the printing presses continue to churn out crisp currency, nobody seems to care.

There are signs that it's getting a bit wearisome. Oil is heading over $100 a barrel for WTI crude, despite a glut on the market, especially in the US. Food prices have moderated lately, but they're higher overall than a year, two, three years ago and will only rise from here.

It's a great market for speculators, especially those wearing blinders. Giddy-up!

Dow 14,018.70, +47.46 (0.34%)
NASDAQ 3,186.49, -5.51 (0.17%)
S&P 500 1,519.43, +2.42 (0.16%)
NYSE Composite 8,955.92, +36.90 (0.41%)
NASDAQ Volume 1,719,904,375
NYSE Volume 3,424,131,000
Combined NYSE & NASDAQ Advance - Decline: 4076-2361
Combined NYSE & NASDAQ New highs - New lows: 450-31
WTI crude oil: 97.51, +0.48
Gold: 1,649.60, +0.50
Silver: 31.02, +0.109

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