Groundhog Day

Not unlike the 1993 movie of the same name, I find that over the past few years and especially during the rally from the October lows things are repeating as in the movie Groundhog Day. Volume is low, prices are rising, indicators are mediocre but sentiment is extreme and cherished studies, tenets and assumptions no longer hold water.

Then we get a break in the market as we did last July and again in November. The market seemed to be respecting its own signals - finally. That is, until we wake up the next day and find it is the previous day. Once again, things stop making sense.

Such is the legacy of the financial crisis and more likely the good intentions going into fixing it. After trillions of dollars, yes the economy is a bit better and yes Government Motors is making cars (I own a Chevy which I really like). But has anything really changed? Are not capitalists being capitalists when the borrow from the government at zero percent and lend it right back at 2% (fed funds and 10-year Treasuries)?

Don't blame the capitalists. That like shooting the lion for eating your goat. Its a lion doing what it is supposed to do. Don't leave your goat outside or better yet, why are you living in the savannah (and I don't mean Georgia)?

If you don't leave zero percent rates out there then capitalists will find other ways to make money - like do business. I won't get into taxes and regulation as we could spend all day arguing on politics - which has no place in this blog.

So, until late 2014 when Big Ben says he will think about raising rates - unless a new Prez kicks him out or abolishes the Fed but again I'll leave that to the political blogs - tomorrow will be like today. We will wake up and it will still be Groundhog Day.

And as is the custom, it is the time of year when I trot out a joke I heard in the 1980s. On February 2, (noted bear) Henry Kaufman sticks his head out from a manhole cover on Broadway and if he sees his shadow there will be six more weeks of a bear market.

Thank you. I am here all the week.