Mad Hatter Market; Euro Nations Threatened with Downgrades

Perhaps Lewis Carroll, whimsical author of Alice's Adventures in Wonderland and its sequel, Through the Looking-Glass might be a great stock picker and market analyst today were he to be revived from the dead and paid a handsome fee for his words of wisdom.

He certainly would find today's whirring trading machines and digitized billions of dollars quite the flight of fancy and he might conjure up one of his more famous characters - the Mad Hatter - to explain what's worth watching and what is mere perception and imagination.

Carroll might be as good at picking stocks as, say, Dick Bove, who keeps recommending Bank of America (BAC) at 7, no, 6, no, 5 and change and he'd be sure to have a more sanguine world view than the liar ex-presidential candidate, Herman (no, no sex, never) Cain, because the world is a weird and dangerous place and investing is an art that might lend itself more to psychedelics and naked speculation than to fundamental analysis and prudent timing.

A bit of amusement Carroll might find in the continuing saga of sick Europe, with it's fanciful money, the Euro and the equally absurd idea that 17 nations might work together for a common good without finding considerable argument and dispute.

And that's where we leave Carroll, laughing all the way to the bank, and digest what weirdness the world's leaders and financial firms played on markets today.

First, German Chancellor Angela Merkel and French President Nicolas Sarkozy (now there's an odd couple) brought the markets some hope with a Monday morning (US time) statement, the latest in a series of promises, hints and innuendo that essentially said nothing except that they are hopeful to have an agreement sometime soon, but definitely by March (we should all live so long).

The most humorous part of the statement is that all parties should agree to mandatory limits on budget deficits that eurozone members must adhere to, or risk possible sanctions. Budget deficit limits were part of the original plan, and we are well aware of just how well that worked out.

US markets responded favorably to the latest promise of stability as all the major indices broke sharply to the upside on the open and continued in rally mode into the afternoon.

Then, the cruel, evil and ruthless Standard and Poors came along and spoiled the festive tea party on Wall Street, saying that France, Germany, the Netherlands, Finland, Austria and Luxembourg have been placed on credit watch negative and that they all may lose their current AAA rating within 90 days if the European debt crisis (or circus) isn't resolved.

Moments later, the Wall Street Journal reported that European officials were awaiting word that all 17 Euro zone members might be downgraded, and that's when the Chesire Cat tripped over and fell onto the stock markets, taking them down many points, though leaving them with some hope and dreaming in positive territory for the day.

(Mad hatters love this stuff. People whose money is tied into the stock market through retirement accounts or other investment vehicles are not so easily amused.)

That's where our story leaves off for today. We're hoping that Sarkozy, who looks a bit mad himself, might make mention of the IMF or SDRs tomorrow, making for even more hilarity and wide-eyed, crazed speculation.

Take the red pill, Alice.

Dow 12,097.83, +78.41 (0.65%)
NASDAQ 2,655.76, +28.83 (1.10%)
S&P 500 1,257.08, +12.80 (1.03%)
NYSE Composite 7,531.01, +77.46 (1.04%)
NASDAQ Volume 1,678,879,250
NYSE Volume 4,154,232,000
Combined NYSE & NASDAQ Advance - Decline: 4177-1469
Combined NYSE & NASDAQ New highs - New lows: 183-42
WTI crude oil: 100.99, +0.03
Gold: 1,734.50, -16.80
Silver: 32.37, -0.31

For today's musical finale, we happily go through the looking glass back to Grace Slick and Jefferson Airplane performing White Rabbit on the Smothers Brothers Comedy Hour in 1967, when things were just a bit different... the Smothers Brothers were funny and offbeat, Grace Slick was young and pretty and Jefferson Airplane was, well, a little bit weird, though musically, quite talented.

At least there were no terrorist-check lines at airports, public buildings and courthouses, banks paid five percent interest on savings and the stock market was mostly for rich people. The rest of us bought savings bonds or baseball cards and hoped for the best.