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European Issues

December 16, 2011 – 5:56 pm

The news coming out of the Euro zone continues to dominate and will do so into the new year. Their efforts so far are too little and too late. I have suggested they needed to be bold, be dramatic, and we got neither. They did agree to a path that they want to take and it is the German path. Long term their efforts will work, but in the short run things may not hold together to get to that long term path. This is why the market is so focused; it looks out a few months not years. It is good to plan long term but you can’t ignore the short term when you do.

The dollar has gotten stronger against the Euro as a result of Europe’s lack of boldness. That has affected our market to the down side. Also, and more importantly, it hurts our exports especially to Europe. Europe is not a major trading partner of ours though they are with China and China’s currency is tied to ours so their exports will suffer more.

At some point Europe’s problems will stop affecting our stock market. That time will be in 2012. However, that might be after something dramatic happens which will cause our market to fall. That fall will be a very good time to invest but before that happens caution is recommended.

The Christmas rally should still show, though its strength is in doubt at this point.

Good Trading
Steve Peasley

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