In the old days, there was a term that said it all: GONE FISHIN’. Doctors, Politicians, Business owners, you name it, would close up shop and just relax. August is here, and planet Earth seems to be in vacation mode. Congress just began its Summer recess. They seem to think their work is done… The European continent traditionally shuts down for the whole month. Wall Street has headed to the Hampton’s, leaving trading responsibilities to the junior staff. Earnings season is coming to an end, and School doesn’t start for a few more weeks. It’s that time again. Everyone seems to be GONE FISHIN’.
At a glance, you might think the Market was snoozing too, with a meager 21 point gain for the DOW on the week. But that sure wasn’t the case. Wide swings driven byEurope, the Fed and a decent job report had global markets spinning out of July and into August. The excitement might not rival that of the Golden Fab Five ladies inLondon, or the decorated Michael Phelps tally of 21, but the price action of stock and bond markets around the globe have been eventful. Friday’s rally has the DOW up 7% on the year. Not too shabby considering all the negative media hype. Don’t get caught up in the hype. GONE FISHIN’.
Besides, it was exactly 1 year ago that the unthinkable happened; theUSlost its AAA rating. Who could forget the crash course last Summer with our debt ceiling, while Politicians played a game of chicken with the fiscal crisis. It was an ugly period of American history. A panicked sell-off ensued. We are now 20% higher from last August’s lows, but the issue that triggered the downgrade has yet to be resolved. The fiscal cliff that was merely delayed is approaching again. If we look for signs on Capitol Hill for progress being made, we’ll find the sign: GONE FISHIN’.
The irony is, once we lost AAA status, safety-seeking money from around the globe immediately poured into Treasuries and US Dollars, and ultimately US stocks. The Markets made it very clear, that despite S&P’s action, there was no question where the real AAA assets resided: in theUSA. American credit in the eyes of the world remained supreme. Remember, S&P cited Congressional Gridlock as a reason for the cut. Investors don’t want to go through that again. GONE FISHIN’.
We’ll be back, dark and early Monday. We’re on it. Enjoy the weekend. Enjoy the Olympics. For now, we’ve GONE FISHIN’
By: Mike Frazier