The markets continue trying to discover what things are worth. With so many things in motion, so much fog and so much doubt, they’re having a hard time. Every day seems to bring 100+ moves in the Dow.
Yesterday, the Dow rose 178 points. Investors paused. They heard rumors that maybe Greece wouldn’t hold a referendum on further austerity moves. They saw France and Germany twisting the Greeks’ arms.
Maybe Europe will get its act together, after all, they said to themselves. But today’s news tells us that the Greek cabinet has approved the call for a referendum…even though the French and the Germans are threatening to withhold money.
“If they want to have a referendum, that’s of course their right, and we very much respect democracy,” a senior official told The Financial Times. “But in that case, they probably should not expect the others to pay out money before they get the answer.”
And hey, the news from the US economy wasn’t terrible. It added 110,000 jobs last month.
Wait… The working age US population rises by about 200,000 a month. Even if only about half of them want jobs, that’s still only keeping up with unemployment…not getting ahead it.
But the US economic forecast seems hardly to be improving. Even the Fed says the sky is getting darker. The New York Times reports:
Fed Lowers Its Forecast for Growth, but Takes No Steps
WASHINGTON — The Federal Reserve significantly reduced its forecast of economic growth through 2013, acknowledging that it had once again overestimated the nation’s recovery from the 2008 financial crisis.
Despite the bleak forecast, however, the Fed said that its policy-making committee had decided against taking new measures to stimulate growth at a two-day meeting that concluded Wednesday. The Fed’s chairman, Ben S. Bernanke, said that the central bank already was pushing hard to spur growth and create jobs.
“We have taken a lot of actions,” Mr. Bernanke said at a news conference after the announcement. He added that Congress, by contrast, was not doing enough to pull the levers of fiscal policy. Lawmakers are gridlocked over a new jobs proposal from the White House, and a special bipartisan committee charged with reducing the deficit is struggling to reach agreement by Thanksgiving.
This is a difficult time for the Fed and its chairman. Republicans charge that the central bank’s existing efforts have gone too far, sowing future inflation. Democrats say that in hesitating to do more, the Fed is ignoring the plight of more than 25 million Americans who cannot find full-time work. And the sluggish pace of growth, which continues to fall short of the Fed’s predictions, is a bright marker of its failure to stimulate a recovery.
Gold went up yesterday, too. It rose $17.
Discovering…discovering…always discovering. We were surprised that gold had not fallen more. We were surprised that stocks had not fallen more too.
But just like Mr. Market to toy with us…to string us along…to tempt, tantalize…and then, disappoint…us. He’s like a cat playing with a mouse. The poor little mouse is doomed…
What better way for Mr. Market to deceive everybody! First, he pretends that a recovery has been set in motion.
Then, he pretends that inflation is heating up.
Then, he tips everything towards depression…
And then, he hesitates…neither gold, nor oil, nor stocks have corrected as much as we think they should. Investors get back into stocks. Oil goes above $90.
Surely, he is getting ready to pounce again…and take another pound of flesh out of investors’ fat derrieres…
Stick with the program, dear reader. Sell stocks on rallies…buy gold on dips.