Good Morning All,
Positive market activity this week has continued to validate our view that stocks are headed higher over the coming weeks with our initial target of 1060 S&P 500 likely to act only as a resting point along the way to 1200. Although there is much bearish talk about the danger inherent in the low volumes that have accompanied this summer rise, the contrarian in me is assured that large volume days and big market moves are yet to come. When this happens, we will enjoy the "blow off" rally that will set up the fall, but that fall will take place from a much higher plateau.
Ted Kennedy's death should remind us all of the history behind the drive for Medicare. It should also be a time to further debunk the myth of Reaganism by remembering that the late idol of the right cut his political teeth opposing its enactment. It is ironic now to watch elderly Reaganites expressing personal terror of having it "messed with". August 26Bill Copp As usual...Paul Krugman, not the CNBC libertarians...is spot on.
August 24, 2009
Op-Ed Columnist
All the President’s Zombies
By PAUL KRUGMAN
The debate over the “public option” in health care has been dismaying in many ways. Perhaps the most depressing aspect for progressives, however, has been the extent to which opponents of greater choice in health care have gained traction — in Congress, if not with the broader public — simply by repeating, over and over again, that the public option would be, horrors, a government program.Washington , it seems, is still ruled by Reaganism — by an ideology that says government intervention is always bad, and leaving the private sector to its own devices is always good.Call me naïve, but I actually hoped that the failure of Reaganism in practice would kill it. It turns out, however, to be a zombie doctrine: even though it should be dead, it keeps on coming.Let’s talk for a moment about why the age of Reagan should be over.First of all, even before the current crisis Reaganomics had failed to deliver what it promised. Remember how lower taxes on high incomes and deregulation that unleashed the “magic of the marketplace” were supposed to lead to dramatically better outcomes for everyone? Well, it didn’t happen.To be sure, the wealthy benefited enormously: the real incomes of the top .01 percent of Americans rose sevenfold between 1980 and 2007. But the real income of the median family rose only 22 percent, less than a third its growth over the previous 27 years. Moreover, most of whatever gains ordinary Americans achieved came during the Clinton years. President George W. Bush, who had the distinction of being the first Reaganite president to also have a fully Republican Congress, also had the distinction of presiding over the first administration since Herbert Hoover in which the typical family failed to see any significant income gains.And then there’s the small matter of the worst recession since the 1930s. There’s a lot to be said about the financial disaster of the last two years, but the short version is simple: politicians in the thrall of Reaganite ideology dismantled the New Deal regulations that had prevented banking crises for half a century, believing that financial markets could take care of themselves. The effect was to make the financial system vulnerable to a 1930s-style crisis — and the crisis came. “We have always known that heedless self-interest was bad morals,” said Franklin Delano Roosevelt in 1937. “We know now that it is bad economics.” And last year we learned that lesson all over again.Or did we? The astonishing thing about the current political scene is the extent to which nothing has changed.The debate over the public option has, as I said, been depressing in its inanity. Opponents of the option — not just Republicans, but Democrats like Senator Kent Conrad and Senator Ben Nelson — have offered no coherent arguments against it. Mr. Nelson has warned ominously that if the option were available, Americans would choose it over private insurance — which he treats as a self-evidently bad thing, rather than as what should happen if the government plan was, in fact, better than what private insurers offer.But it’s much the same on other fronts. Efforts to strengthen bank regulation appear to be losing steam, as opponents of reform declare that more regulation would lead to less financial innovation — this just months after the wonders of innovation brought our financial system to the edge of collapse, a collapse that was averted only with huge infusions of taxpayer funds.So why won’t these zombie ideas die?Part of the answer is that there’s a lot of money behind them. “It is difficult to get a man to understand something,” said Upton Sinclair, “when his salary” — or, I would add, his campaign contributions — “depend upon his not understanding it.” In particular, vast amounts of insurance industry money have been flowing to obstructionist Democrats like Mr. Nelson and Senator Max Baucus, whose Gang of Six negotiations have been a crucial roadblock to legislation.But some of the blame also must rest with President Obama, who famously praised Reagan during the Democratic primary, and hasn’t used the bully pulpit to confront government-is-bad fundamentalism. That’s ironic, in a way, since a large part of what made Reagan so effective, for better or for worse, was the fact that he sought to change America ’s thinking as well as its tax code.How will this all work out? I don’t know. But it’s hard to avoid the sense that a crucial opportunity is being missed, that we’re at what should be a turning point but are failing to make the turn.•
Wednesday, August 26, 2009
Monday, August 24, 2009
August 24 2009
Good Morning All,
After passing the 1000 mark on the S&P 500 early in the month, markets spent the middle part of August in a push me-pull me mode, one that ended last week when the bull side of the investment argument emerged victorious. As this letter has iterated in more than one printing, we believe that this important "benchmark" index will close above 1060 by early September or maybe, early Tuesday. The question of where to next now becomes even more important to those who have come late to this once in a multi-generation banquet. Many of these aforementioned folk, nonbelievers if you will, are still awaiting the arrival of Armageddon or worse, and are thereby holding cash. They may well be right...someday. Meanwhile it may be of greater significance to try to map out a market future rather than an economic one.
If Dave Nichols of the Fractal Report is correct, markets could rise beyond the September cutoff of 1060-1100 to reach a 1250 crescendo early in October. This would nicely coincide with my penchant for a blow off, throw-in-the-towel rally that would culminate in an October currency crisis. The stategy at hand would entail dating some of your favourite stocks as opposed to marrying them. Even though I remain positive about the next five years, markets are shaping up for a somewhat normal year with the potential for a mid to late October crash/correction. Should such a cleansing occur, it would offer both solace and opportunity to permabears on the one hand and alert bulls on the other. The third hand belongs to those who have it firmly emplaced, along with their heads, somewhere in their personal anatomy.
Commentary
The "New Colossus" is a poem by Emma Lazarus whose famous words are etched into the Statue of Liberty - you know the ones..."give us your poor, your tired, your huddled masses...". What it failed to say was give us your mean-spirited and your incredibly stupid, in order that a future America will be able to populate its airwaves with demagogues, its evangelical churches with morons and one of its political parties with the greedy and the disingenuous.
The late Bobby Kennedy was fond of saying that "20% of the people are against everything, all of the time". This homily has since taken on even greater meaning during the health care debate, or should I say rants, wherein a bunch of crazy white people are running around in support of the insurance companies that either just creamed them with unconscionable premiums or took away their coverage. One often repeated anecdote tells of the elder genius who told one town hall meeting to keep the government's hands off his MEDICARE. Crazier still was the Arizona meeting during which one bright light had an assault rifle strapped to his back, shocking the civilized world when we learned that his act was perfectly legal in that state. The first thing I listen for each morning is no news... on an attempt on the President's life.
After passing the 1000 mark on the S&P 500 early in the month, markets spent the middle part of August in a push me-pull me mode, one that ended last week when the bull side of the investment argument emerged victorious. As this letter has iterated in more than one printing, we believe that this important "benchmark" index will close above 1060 by early September or maybe, early Tuesday. The question of where to next now becomes even more important to those who have come late to this once in a multi-generation banquet. Many of these aforementioned folk, nonbelievers if you will, are still awaiting the arrival of Armageddon or worse, and are thereby holding cash. They may well be right...someday. Meanwhile it may be of greater significance to try to map out a market future rather than an economic one.
If Dave Nichols of the Fractal Report is correct, markets could rise beyond the September cutoff of 1060-1100 to reach a 1250 crescendo early in October. This would nicely coincide with my penchant for a blow off, throw-in-the-towel rally that would culminate in an October currency crisis. The stategy at hand would entail dating some of your favourite stocks as opposed to marrying them. Even though I remain positive about the next five years, markets are shaping up for a somewhat normal year with the potential for a mid to late October crash/correction. Should such a cleansing occur, it would offer both solace and opportunity to permabears on the one hand and alert bulls on the other. The third hand belongs to those who have it firmly emplaced, along with their heads, somewhere in their personal anatomy.
Commentary
The "New Colossus" is a poem by Emma Lazarus whose famous words are etched into the Statue of Liberty - you know the ones..."give us your poor, your tired, your huddled masses...". What it failed to say was give us your mean-spirited and your incredibly stupid, in order that a future America will be able to populate its airwaves with demagogues, its evangelical churches with morons and one of its political parties with the greedy and the disingenuous.
The late Bobby Kennedy was fond of saying that "20% of the people are against everything, all of the time". This homily has since taken on even greater meaning during the health care debate, or should I say rants, wherein a bunch of crazy white people are running around in support of the insurance companies that either just creamed them with unconscionable premiums or took away their coverage. One often repeated anecdote tells of the elder genius who told one town hall meeting to keep the government's hands off his MEDICARE. Crazier still was the Arizona meeting during which one bright light had an assault rifle strapped to his back, shocking the civilized world when we learned that his act was perfectly legal in that state. The first thing I listen for each morning is no news... on an attempt on the President's life.
Tuesday, August 11, 2009
August 11th Edition
Good Morning All,
The S&P 500 held above its newly acquired recovery high of 1000 plus yesterday, despite a bout of early week profit-taking. The question now before us is no longer about 1075 by early September, but rather, how much sooner and how much higher? The Fed will meet over the next two days and will not likely change anything or affect markets one way or another. This market is about momentum and unused cash, and until the latter has been somewhat exhausted, the momentum will continue to drive prices upward. Favourite groups are still those I noted last November/December although many other sectors have since joined the fray. Stem cell stocks and other small biotechs have enjoyed a strong summer and I suggest you refer to my list. Opaxa, another stock I own and follow, rose over 400% on Friday after announcing a deal with Novartis. There are many similar buyouts in the offing, as this multi generational opportunity plays out.
I reiterate the opinion that this is shaping up to be a normal autumn prefaced by the current summer rally. Serious profit-taking may make the latter weeks of September fearsome...so be nimble of mind and remember the real lesson of these past two years. Market direction is the only thing you need to know, and for most of us the long term is in sight.
Commentary
The town hall meetings on health care now taking place in the United States have brought much of the Republican leadership to the depths of depravity. Mob rule is a very scary social condition at any time, but when it is encouraged, not just by the Rush Limbaugh assholes of America but by many in elected positions, it can be doubly dangerous. Much of what is going on may even border on sedition. As a Canadian who is well versed through experience in the plusses and shortfalls of our Medicare system, I find the constant misrepresentation of the plan both repulsive and insulting. I am also fearful for America and for the safety of its first adult President in many, many years. This is all beginning to look like an old western movie, you know, the one where the bad rich guy stirs up the lynch mob. Essentially this debate is about the non-inclusive insurance company bureaucrats versus the government bureaucrats. Weirdly, many of those opposing the health care initiative have no insurance themselves. Let's hope that there is a Hollywood ending to the script.
On a more practical front, it would seem that the combination of anti-Sotomayor votes and this continued assault on sanity and conservative principles will further isolate the GOP. Just Google Sarah Palin's comments on health care and as you do, wonder what might have been...I shudder still.
And finally, for all you conservatives out there who disagree with the foregoing...reread Edmund Burke.
Bill Copp
Montreal , Canada
August 11, 2009
The S&P 500 held above its newly acquired recovery high of 1000 plus yesterday, despite a bout of early week profit-taking. The question now before us is no longer about 1075 by early September, but rather, how much sooner and how much higher? The Fed will meet over the next two days and will not likely change anything or affect markets one way or another. This market is about momentum and unused cash, and until the latter has been somewhat exhausted, the momentum will continue to drive prices upward. Favourite groups are still those I noted last November/December although many other sectors have since joined the fray. Stem cell stocks and other small biotechs have enjoyed a strong summer and I suggest you refer to my list. Opaxa, another stock I own and follow, rose over 400% on Friday after announcing a deal with Novartis. There are many similar buyouts in the offing, as this multi generational opportunity plays out.
I reiterate the opinion that this is shaping up to be a normal autumn prefaced by the current summer rally. Serious profit-taking may make the latter weeks of September fearsome...so be nimble of mind and remember the real lesson of these past two years. Market direction is the only thing you need to know, and for most of us the long term is in sight.
Commentary
The town hall meetings on health care now taking place in the United States have brought much of the Republican leadership to the depths of depravity. Mob rule is a very scary social condition at any time, but when it is encouraged, not just by the Rush Limbaugh assholes of America but by many in elected positions, it can be doubly dangerous. Much of what is going on may even border on sedition. As a Canadian who is well versed through experience in the plusses and shortfalls of our Medicare system, I find the constant misrepresentation of the plan both repulsive and insulting. I am also fearful for America and for the safety of its first adult President in many, many years. This is all beginning to look like an old western movie, you know, the one where the bad rich guy stirs up the lynch mob. Essentially this debate is about the non-inclusive insurance company bureaucrats versus the government bureaucrats. Weirdly, many of those opposing the health care initiative have no insurance themselves. Let's hope that there is a Hollywood ending to the script.
On a more practical front, it would seem that the combination of anti-Sotomayor votes and this continued assault on sanity and conservative principles will further isolate the GOP. Just Google Sarah Palin's comments on health care and as you do, wonder what might have been...I shudder still.
And finally, for all you conservatives out there who disagree with the foregoing...reread Edmund Burke.
Bill Copp
Montreal , Canada
August 11, 2009
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