What would an election cycle be without a good old fashioned engineered stock market melt up to make the incumbents happy? Funny how outrage in August over the debt-ceiling debate standoff can lead to a “don’t rock the boat during an election cycle” attitude amongst politicians. With the recent improvement in employment figures and a more populist agenda behind him it would appear President Obama has some momentum right now. While I sincerely doubt Wall Street would approve of another Obama administration there going to have a tough road to hoe if they’re going to make that happen. With a Wall Street melt up in full swing so far in 2012 it makes one wonder from where Mitt Romney is going to draw thunder post convention (presuming he survives the primaries).
Happy with the Wall Street Melt Up in 2012
Personally, I am glad to see the market continue to melt up and employment figures improve. What’s good for the market tends to be what is good for me – so keep the government checks coming until the economy reaches a little better balance vis a vis employment. Somewhere below 7% unemployment would be a nice figure to get to before we start thinking about turning the faucet down a bit. I invite other readers to comment on where the right unemployment figure is.
Forex Trading USD Down so far in 2012
The forex market continues to break new ground in the weak USD territory. I honestly can’t recall a weaker USD versus my favorite non-USD currency, the Aussie. At last look the USD was trading just a smidge under $1.08 per AUD. Folks who dove back into the Aussie late 2011 / early 2012 when it was nearer parity have made an absolute killing in the first 6 weeks of 2012. Add to that the interest rate differential and it’s been nothing but bliss for the risk on traders thus far this year. Gotta love correlations, right?
What to Forecast for Wall Street in 2012
Will we get more of the same in 2012? Unfortunately we still have the likes of John Boehner leading the House of Respresentatives, which means if he thinks he can gain some small bit of political power by holding the economy hostage and roiling markets, he will. Based on the interim agreement made last August over the debt ceiling, Speaker Boehner expects to take another crack at the issue again before the election cycle is completed. Given the (thus far) favorable employment numbers coming as a result of continued loose money policy, Speaker Boehner is going to have a very tough sell – and despite a likely pull back during the next stand off, the market should continue forward.
What makes me sad is that there is another strong likelihood that 2012 could be a year in which all of the gains for the year come in the first quarter with the rest of the year spent treading water. A repeat of 2011’s performance would be really disappointing. Somehow I think we’ll avoid that and show some modest gains by year end – even if it means flat-lining (overall) between April and December.