I purposely kept the Cyprus noise out of my work this weekend, preferring to let just let it play out on Monday and beyond without pretending that anything I could interpret would help the analysis, which continues to move forward on its own.
That is because we have long-since entered the era where these disruptions are liable to crop up at any point, roiling markets and once again getting a noisy cacophony going. PIIGs meltdown, Debt Ceiling debate, Greek Austerity, ECB decision, divisive US election, Fiscal Cliff, Sequester, Italy vote, Cyprus and on and on we go.
What could happen here? Why Uncle Buck is going to get the bid, stocks will probably go down and gold may pump and then dump as they churn out the ‘strong USD’ stuff. That’s far from definite, but I could actually see gold get hit again after it gets a mini knee jerk benefit on ‘bank run!’ hysteria. We’ll see. But this is Wonderland and meddling policy makers and their agents the world over are going to be heavily in play with their big, fat mouths open and their agents’ fingers on keyboard buttons.
As for stocks, how is this for a game plan? Stocks may finally take a moderate correction from seriously over bought levels on this event. Bears then declare they are in control but eventually a safe haven bid for Fortress America (ha ha ha) comes into play.
Speaking of Fortress America, the FOMC certainly has a convenient excuse to roll over on Wednesday and keep the inflation spigots going, don’t they? We don’t need any of that exit plan talk because after all, a crisis is cropping up! Just in case the ‘organic’ economy is still in any doubt whatsoever (yes, that is sarcasm), we’ll keep things as is.
What ever goes on this week, let it be a lesson to the come-lately bulls and the ‘real’ economists that what they have built their fantasies upon is not solid. It is the result of policy that began being implemented long ago by Sir Alan Greenspan and has spread throughout the world as moral hazard, just like the interconnected global financial system, knows no bounds.
Cyprus blah blah blah. It is just one more manifestation. The ECB helps create these manifestations. Ben Bernanke’s predecessor helped create them. “Our Hero” (–The Atlantic) continues to promote them.
It should be good times to be had by all as bulls and bears battle it out and smart sounding people find new holes in the dike, try to rationalize and intellectualize them and then stick their fingers in there and hope for the best. This thing is slowly, over the years, just degrading.
What ever goes on this week is just the latest sad manifestation.