Groundhog Day

More bullish cheers this morning as France and Germany offer another round of reassurance–long on promises short on substance.  We have been down this road so many times in the past 12 months, that classic movie Groundhog Day comes to mind.  For more on today’s Euro news see Pimco’s Balls on European Bank Capital Plan. And for a good over-view of the inability of finance types to see downturns coming, see the NYT:   A recession forecast that ‘s been right before.

Perhaps this next leg of risk rally could last a few weeks even into year-end. The EU is trying to extend investor belief along to the G20 summit November 3-4, but then magical solutions are likely to evade them once more. In the meantime, the main feature–the incoming global recession will continue to advance with disappointing economic data over the next several months.

Demographic trends continue to favour risk aversion, de-leveraging and lower spending. I agree with Harry Dent, founder of economic advisory firm HS Dent on these themes. See Author on Outlook for “The Great Crash Ahead.”  And yes the good news is that we could actually get to a major bottom and opportunity of our generation in the stock market within the next 3 years, maybe sooner.  In the meantime, the focus must be on capital protection, liquidity, and on going risk measurements.

On an entertaining note, I recently saw Moneyball, and enjoyed it immensely.  The story about the business of baseball has many parallels with my own experience in the money business.   Last week author Michael Lewis  spoke with Charlie Rose on the movie and his book ‘Boomerang: Travels in the New Third World’.  Watch the video here.