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A Painful Drama

December 12, 2011 – 6:13 pm

There was little additional news coming out of the European meetings over the weekend and as investors and traders review what was agreed to and announced on Friday they are not all that pleased this morning. It appears that the tighter rules for the union, while a very good step in the right direction was less than hoped for. The reason is because there was less than impressive increase in IMF Funds commitment.

Markets around the world want to see a very strong move by the EU to bolster the ECB having the European Central Bank take clear bold steps to back stop the financial system in Europe (something similar to our Federal Reserve). That did not happen. Expect worry to continue for that part of the world. They are likely already in recession and doing little to fix it at this point.

In the U.S. retail sales will be released tomorrow for November and that is likely to be a good number. Consumer spending is keeping our economy moving forward and as long as the consumer keeps it up we should continue to grow. Also, Corporate America is very healthy with a large cash hoard that should translate into continued capital goods spending.

Therefore, we are looking at a contest between the negative effects on our economy coming from Europe and the beneficial effects of consumer and corporate spending. And let’s not forget the wild card of China. Will they rev up their economy again or be content with single digit GDP growth attempting to keep a lid on inflation?

If we could grow the job market that certainly would help but there is little evidence of that so far.

Good Trading
Steve Peasley

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