MorningWord 9/12/12: It’s all becoming very clear now, the fix is in. The price action in global equities, both developed and emerging has been one way since the ECB has articulated it’s plan to save the Eurozone and since Friday’s U.S. employment data was so bad that it was good for QE on this side of the Atlantic. Central bankers in Europe are once again going down a path to stem systemic risks without addressing the issues of stimulating growth, while the U.S. Fed is going to try to “QE” growth again back into our economy for the 3rd time in so many years. At this point I think it is safe to say that it is time to try something new!
So back to the Fix Being In, the obvious trade this week is to NOT Fight the Fed……why would you when we saw last weeks reaction to the ECB plan? I honestly can’t think of a good reason to do so, and at this point of the year, all systems could be a go until we get through the election in early Nov and start to focus on a grand compromise on the so called “fiscal cliff”.
As we head into the end of Q3, with the SPX up 14% ytd, earnings guidance for Q4 will likely hold the key to the continuation of the rally, but given the few peeks at Q3 (FDX, INTC, TXN, KFT) it appears that earnings visibility is going to be clear as mud. I think there is a huge distinction that needs to be made between equity markets that are trading at multi-year highs and economies that are seeing weakness that rivals that of pre-financial crisis levels. Weak earnings visibility, Obama re-election, fears relating to fiscal cliff and some fairly unforeseen global macro event could through a tiny little wrinkle back into the rosy equity return environment, my sense is that it would be prudent to be a tad cautious when it appears the investment world is complacent.
One more things: I bought a Galaxy III s last night and put down my iPhone4s, and at first blush I love it. My biggest issues are work around with all of my data and content that are very much intertwined into the iTunes/Mac halo thingy. This will be work in progress, but the irony here is that AAPL won a huge victory against Samsung for patent infringement, when it is clear that the Galaxy is the far more innovative phone from a hardware and software standpoint. If AAPL does not release a game changer today, get ready for more and more litigation.
Also Last night in Brooklyn I saw one of my favorite fairly new bands, We Were Promised Jetpacks at the Bell House, they opened with Keeping Warm, here is a clip from my new tricked out Samsung Smartphone: