Double Dipping
by David Atkins (“thereisnospoon”)
Some bad news on this first Monday of October (or as Wall Streeters call it, the first day of Q4 2011):
It’s a new quarter on Wall Street, but not a new mindset: Nervous investors worldwide kicked off the final three months of the year Monday by dumping stocks and fleeing once again for the classic haven of Treasury bonds, as fears over the global economy resurged.
That totally makes sense. To hear conservatives tell it, the world economy is paralyzed by debt, which makes bond traders nervous that nation states won’t be able to make good on their currency-backed obligations. So it’s only natural that all the Very Serious People have been pushing for austerity and belt-tightening to reinvigorate the confidence fairy and please the big bond traders. It also makes sense, then, that all of these nervous bond trading Masters of the Universe who are so worried about the United States’ long-term solvency and the health of the dollar are fleeing the stock market to buy Treasuries.
Clearly, inflation and government spending are a major concern for the market. After all, the very wise people on the teevee never stop saying so.
In a potentially ominous sign, the Standard & Poor’s 500 index closed below the 1,120 mark, which is where it had bounced three times since early August. The S&P sank 32.19 points, or 2.8%, to end at 1,099.23, a new 52-week low.
The Dow industrials slumped 258.08 points, or 2.4%, to 10,655.30, also a 52-week low, after diving 12% in the third quarter.
Despite data Monday showing an uptick in U.S. manufacturing activity in September and strong car sales for the month, those reports were good only for a modest rally at the beginning of trading, before sellers took control.
“Everything has a negative bias now,” said Andy Brooks, a veteran stock trader at T. Rowe Price Group in Baltimore. “Where’s the glass-half-full crowd?”
The glass half-full crowd? I think I’ve found them:
Yeah, those folks aren’t too worried. They’ll be fine no matter what. They can make money off bear markets as well as bull markets. The rest of us? Not so much.
But then again, the rest of us haven’t been making any more money than we were 30 years ago. Those bull markets basically served to employ a lot of people in a useless financial industry, and in short-lived real estate and construction industries. Now that the house of smoke and mirrors has collapsed, it’s fairly clear that neither bull nor bear market has much impact on the rest of us, either. Record profits and high stock prices didn’t lead “job creators” in America to actually create jobs (outside of the criminal and overinflated housing and financial sectors), so it’s hard to know why we should cheering bull markets and fearing bear markets, exactly.
Someone will have to explain why the valuation of the Dow actually matters save to those nearing retirement, nervously tracking 401Ks that were foolishly put in place of guaranteed pensions in order to feed Wall Street’s gaping maw.
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