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STOCKS HANGING TOUGH?

A barrage of bad news is hitting stocks today, but the S&P is just 0.8% off yesterday’s closing price.  The risks appear to be mounting up quickly, but investors remain wildly confident in a long and sustainable recovery ahead:

  • Goldman criminal probe increases risks of further bank investigations.  As we said two weeks ago this sector cannot be touched with the White House’s war on Wall Street unfolding.
  • The sovereign debt problems in Europe appeared to be resolved, however, the painful austerity measures will not only weaken the European economy, but do nothing to resolve the actual issue at hand – it’s the currency, stupid!  In addition, the potential for contagion is on the rise as Portugal and Spain will likely be forced into similarly painful austerity measures that further weaken the region and increase the risk of sovereign debt and a deepening recession in Europe.  In my opinion, the precedent set by the bailout is nothing short of atrocious and will impose severe strains on the citizens of Europe.

Despite all this, the market is down just 0.8%.  Is the market hanging tough or is this just more signs of investor complacency?

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