Monday, Monday
January 12, 2009
Days like today with a lack of market-moving data releases or official speeches happen mostly on Mondays. These are days for reflection. Look to any news source, print or electronic, and the content and analysis are depressing. The unifying theme is the absence of public confidence in just about everything including the private and public sectors. Programs like TARP seem to have made little difference, yet proposed stimulus plans the world over are getting panned as too little and and too late. Long-term worries fester about debt, unsolvable wars, and a deteriorating environment. A nice start for share prices on January 2nd was a hello-goodbye flash in the pan. The DOW already is 3% lower this year and 27% below its peak of 11,723 on January 14, 2000. A year from now, analysts will be writing about the market being considerably below highs attained ten years before — shades of Japan. Even the weather is not cooperating. The northern half of the United States is experiencing cold and stormy weather. The first calendar is the hardest period to adjust for seasonal variation. Sometimes January sees a thaw. The economy could use a favorable act of nature. Even with a mild winter, first-quarter growth will be deeply negative. One does not want to contemplate how bad the figures will be if the weather is unseasonably extreme. A curiosity on the foreign exchange front is the similarity of the euro’s present level to its quote of $1.380 on August 8, 2007 when the financial market first unraveled. Against other currencies, the dollar has advanced 36% against sterling, 27% against the Australian dollar and 15% against the Swiss franc, but it has dropped 26% against the Japanese yen. 2008 was a volatile year for many currencies, but the world’s most influential FX relationship is near to its starting level.
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