It seems that we’re seeing a growing trend in defaults both at home and abroad. Despite all of the gyrations not to call a spade a spade, Greece has officially defaulted on its bonds (surprise, surprise). Much closer to home, we learn that U.S Cities have increasingly resorted to bond defaults.
This Tuesday, the Federal Reserve Board Open Market Committee (politburo) will be meeting. Despite all of the rhetoric, real inflation is too high, elections too close, and the illusion of prosperity too ingrained for even this dovish board to do anything but promulgate platitudes.
In the midst of this darkness, the stock market indices purport that we have weathered the storm and thanks to the miracle of mirage (including mirage money), the crisis of 2008 is behind us. While the bulls saw a little scare on Tuesday from a 200 point drop in the Dow, the week turned out in sum to be a non-event with the indices ending almost where they started. Even the Fed central bank dollar swap facility dropped significantly this past week from $108 billion to $71 billion as a result of the ECB significantly reducing its holdings.
Many market technicians remain strongly bullish on the stock market. The VXO continues to register low fear while investor sentiment stays very positive. I remain skeptical as the low volume indicates a lack of conviction. While my view is clearly a contrarian position, admittedly it’s getting mighty lonely out here.