Why is the title of this post the name of a hand game? Because that's the gist of what's going on this morning around the world. First off, the Presidents speech last night, from what I saw of it (church softball is more important) was powerful and direct. He outlined several initiatives aimed at job creation, and the majority of such centered around tax reform, which our country definitely needs...but good luck with that. Already this morning the Republicans have been on the news in full force negating and commenting on everything that was mentioned by the President last night. Like I said yesterday, until Washington decides to come together and compromise on the issues facing jobs and the economy, then it's all just political posturing.
So, back to our favorite hand game paper/rock/scissors...well, here's what I'm talking about:
- Paper is the "neutral" part of the equation. The U.S. economy and markets are neutral in that they are neither positive nor negative, nothing to get excited about nor depressed (of course this is in general because as we've seen one day people can make a lot of money whereas the next day the markets can be down big). Depending on the day, we can get economic data that implies improvement or we can get data that foretells of decline.
- Rock is the "strong" part of the equation. The recent economic data out of both China and Japan show that certain regions of the world are still growing. China has been dealing with their own "housing bubble" of late, but it appears that the government is doing a good job of avoiding a collapse similar to what we saw in 2008. Japan, as I've mentioned here before, is seeing pretty good growth at a time when the rest of the world is struggling. Going forward, I am very positive on the prospects for both Japan's economy and specifically their stock market.
- The Scissors are the "negative" part of the equation because they CUT you. The Scissors of course are the struggling countries in Europe. On any given day, we can wake up and read about good economic numbers out of the U.S. and Asia, or we can see that the Chinese and Japanese stock markets are both up, but that really doesn't matter because we are still held captive by the financial calamity taking place in Europe.
Now as I reference the paper/rock/scissors game, I'm trying to explain that because of all the crosscurrents that are taking place around the world, on any given day one specific headline or event can control and manipulate the markets...and as we've seen lately, the Scissors have been winning the game...
I'll comment on some individual stocks shortly, but as I type, stocks are down by almost 2%. This is because there are more concerns out of Europe regarding the Greek financial bailout (of course), and there is also a terror warning that has been issued for the weekend due to some recently gathered intelligence information..
