The report of Santa’s death was a great exaggeration, to turn Mark Twain’s classic quip. In fact, the jolly ole man in red is on a roll: The Dow soared 800 points since Thanksgiving weekend, back above 12,000. That’s 7% and the best weekly gain in nearly 3 years.
The catalyst for the surge was news that the world’s major central bankers formed a united front in support of Europe. Global hands are now dirty cleaning-up the European mess. The big four powers include our own Federal Reserve Bank, the European Central Bank, the Bank of Japan and the Swiss National Bank. They pulled together, to ease the stress in financial markets and assuage investor nervousness about the debt crisis.
Now we’re finding the more Europe stays away from the headlines, the clearer it is that the US is staging an economic comeback. Friday’s job report was solid on all accounts, with 120,000 new jobs created in November, and the unemployment rate fell below 9% for the first time this year. In fact, the current 8.6% unemployment is the lowest number in 2 ½ years. Make no mistake, unemployment remains way too high, but we are definitely moving in the right direction again.
As we mentioned for the past month, the holiday season is a powerful force that traditionally sends both stock and bond markets exploding higher. The stock market historically takes off after Thanksgiving as an early “January effect” typically ensues. This week also signaled the start of the holiday season, which is a happy time for consumers and investors alike.
We anticipate this year-end rally to continue for the market, and were aggressively buying the November weakness. Be assured we will keep working both bonds and stocks so your investments finish out 2011 in the green. It’s beginning to look a lot like Christmas…
Have a nice weekend