Last Monday the bulls were oozing with confidence after a triple digit gain on the first day of trading in 2011 following a massive rally in December. I think I saw several of the CNBC girls achieve orgasm periodically throughout the day as the market stormed out of the gates.
My oh my...What a difference a week makes.
The market has done nothing but sink ever since albeit slightly. The question many traders have now is will the market be able deliver the massive earnings beats that the market has currently priced in?
Alcoa kicked things off after hours and beat but the stock barely moved despite announcing a 12% earnings growth forecast for 2011. Hehe...Good luck with that Alcoa.
Where is the growth going to come from? Europe and the USA are both disasters. China is hitting the breaks on it's growth as inflation heats up.
Perhaps they are expecting a building boom in Pakistan?
It looks like another PIIGS nation is about to bite the dust:
"CONTAGION CONCERNS: Portugal's borrowing rates briefly spiked to euro-era highs amid reports other European nations are pushing it to accept outside help to keep its debt crisis from spilling over into Spain.
PEER PRESSURE: The early spike in yields followed a report in German newspaper Der Spiegel that France and Germany are both pressing Portugal to tap a European rescue fund.
BAILOUT TALLY: Analysts estimate financial assistance for Portugal would be between ?50 billion and ?100 billion ($65 billion to $130 billion). But EU officials deny a bailout is in the works for Portugal."
These bailouts are nothing but Monopoly money at this point.
Expect to see the same Eurozone debt fire drill:
The bankers will threaten Portugal with their financial lives if they don't take the bailout. Portugal will say they are fine knowing that they eventually cave in to the banksters and take the money. The losers of course will be the Portuguese who instantly become debt slaves for the rest of their lives. Austerity will immediately be put in place which will trigger social unrest as the country is forced to cut jobs and entitlements.
Rinse, wash, repeat.
The Bottom Line
You have to wonder how long the governments of the world can continue to get away with throwing their own people under the bus in order to save the banks.
It's happening over here too:
"California Governor Jerry Brown's budget will cut spending by $12.5 billion, including as much as a 10 percent pay reduction for most state employees, aides said.
The plan, which Brown is to unveil today, will also raise $12 billion by retaining tax increases due to expire and making other modifications. Some of the revenue will go to cities and counties as part of Brown’s plan to transfer spending authority from the state to local governments."
That's going to leave a mark. I am sure all of this will be bullish for the markets!
I applaud Jerry Brown for at least trying to do something about it. However, it appears he didn't touch the unions for the most part which is very disappointing.
Nonetheless this state is fiscally screwed and paying back this deficit is going to be very painful. Why anyone would want to live in this cesspool is beyond me.
Before I continue, please save your breath if you are going to attempt to defend this place. I know the weather is great out there. I also understand that you can also legally smoke mountains of pot in between innings at a Giants game.
You are going to need both of these things way I see it moving forward in California: Hoovervilles aren't heated, and the drugs will able to provide you with a nice escape as you sit in your refrigerator box and think about which garbage dump you plan on picking your next meal from after you get the munchies.
Party on folks! There is plenty more monopoly money that is around for the taking! It will be interesting to see if this printing party will continue to move the markets higher.