Been out of the country for the past week, so a little behind in some writing. No matter where we go on the planet of course, we are always tracking the market. Last week was colourful indeed. Bailout package scraped through. Now we will wait to hear details re the plan expected Wednesday on how to help homeowners get principle reductions on their outstanding mortgages. I think team Obama is on the right track with this theme. Until debt is reduced spending cannot rebound. Even with reductions in debt service payments, spending will be weak for a good long while. And so it should. People bought way too much, and so now they will spend very little for longer than many can imagine. Might as well get used to it. Consumers have come to their senses at last, and there is just no tricking them out of this new wave of frugality. We must just accept it and look for the opportunities this new era will bring.
As for the market, no verdict yet. Weakness last week, but held above the November lows. I note there is plenty of pessimism to go around though. Dark, dark, dark. Maybe this is the darkest before the dawn. Governments of the world are all moving mountains to get the system inflating again. They will be successful one of these days. In the meantime, we continue to guard our capital very carefully. We are recently long a little, but will continue to watch it very closely.
I read two good books this week. Obama's “The Audacity of Hope”, and Al Gore's “The Assault on Reason.” I recommend both. Even for Republicans it seems to me that reading the worldview of the new President is insight worthy of our time. “Audacity” covers the main themes that will be relevant to how Obama leads. My take is he is a disciplined, thinking man with a very tough job. Gore's “Assault” itemizes the horrors of the Bush Administration. Want to talk about dark? Undoubtedly history will grade the last 8 years as some of the darkest times in the life cycle of democracy. North Americans need to re-ignite a passion for reading and thinking, enlightened debate, personal responsibility. Media has to retract from sponsored show biz and sound bites and get back to professional journalism.
The silver lining though is that now that we have “hit the wall” so to speak, there is probably more chance for meaningful, productive change today than there has been in decades. As my Irish Granny used to say, “’Ta hell with poverty.” Onward we go.
Cory’s Chart Corner
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