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Goldata Financial
Investing with the accent on rísk
STOCK MARKET COMMENTARY
March 8, 2010
From Elliot
Goldberg, Registered Investment Advisor, Goldata
Financial
Last week, the Grecian formula (for men) was
just the (hair) tonic to push the market to within a few percent of this
year’s high. The Mexican standoff between Greece and the EU ended with the
Greek government passing measures to reduce their deficit by increasing their
VAT tax 2%, increasing other taxes (cigarettes, luxury) and cutting
government salaries. News to me (and I bet to you too) was that Greek
government workers are currently paid 14 months for 12 months of work, a
pretty good gig if you can get it. “Austerity” will reduce one
month’s extra payment 30% in Greek’s quest to reduce its spending
by 2% per year. The workers are already up in arms, as they took over the
Finance Ministry Thursday and made plans for another strike March 16. In
spite of all this, punters could not resist the 6.4% coupon for 10-year paper
Greek offered (€5 billion) and all went to the beach as the crisis was
put off until another day. Put me down as a continued skeptic. Back on these
shores, reports of job losses were not as bad as expected and the continued
increase in mergers and acquisitions (Novell, RCN) also let a notch out of
the noose that holds the bull back. Unfortunately, volume remained weak and
credit continued to shrink, so this week needs to be viewed as the
“to” in the “to and fro” which is expected to
continue over the near future. In Washington, our leaders continued to do
what they do best – let’s just say “be disingenuous”.
Rep. Charlie Rangel (D) stepped down from leading the House Ways and Means
Committee when $500,000 of assets was conveniently “forgotten” amongst
other misdemeanors. I hate when that happens! Our fearless leader, President
Obama, gets the disingenuous award for sticking to his story that the health
care bill will not add to the deficit. One could cut him some slack and say
that he was not aware, but Rep. Paul Ryan’s (R) informative remarks at
the health-care summit seem ignored as inconvenient truths. For example, the
bill contains 10 years of taxes, but 6 years of expenses. It takes $52
billion of Social Security payments, $72 billion from long-term care
insurance and $500 billion from Medicare without replacement. And, amongst
other sins, budgets a 21% cut in doctor reimbursements when it is generally
accepted that this will never happen (it’s been adjusted every year for
the last few years). The point here is that it appears ego and/or political
survival is behind the last push for passage, along with the rationalization
for using reconciliation. Either way, it should be obvious to any adult that
moving ahead without some additional consideration is not wise. In a related
note, Virginia passed a law allowing it to ignore any national health care requirements
passed, hardly a ringing endorsement. Game plan: Up and down markets are
expected over the next few weeks with little net gains. I’ll continue
to sell the spikes, booking gains, move up stops and play the volatility to
our longer-term benefit.
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