Except when it comes to criminal prosecutions!

The mating rituals related to the fiscal precipice and the European debt crisis took their toll on the markets last month.  Some would have you believe that dividend stocks are now worth less because the tax burden will increase on the income to be reported, others are selling their stocks now so that they can pay this years capital gains rate rather than some unknown increase.  Fundamentals will prevail over hype. This time IS NOT different,

With all of the talk related to our domestic fiscal cliff, the slowdown of the Chinese economy, and the European debt crisis added to political turmoil that is ongoing my thought is…

If only we could somehow invest in the company that manufactures the cans that get that get kicked down the road.

The latest round of investor worries have stirred the normal phrenetic reactions from the experts.  The politicians remain steadfast in their minimalist reactions to economic catastrophes and, as a result, volatility continues to plague the equity and bond markets as the European “crisis” evolves.  The  domestic economic malaise that threatens to engulf our own future is totally ignored because it has not yet reached crisis proportions.

What I am beginning to find amusing is the special interest wars.  By that I mean the division of opinions on subjects like climate change where the contrary positions of the large energy producers versus the property insurance industry are diametrically opposed.  We have reached a stage where capitalism and politics have become synonymous.  This does not bode well for a long term optimistic view.  If special interests can monopolize public opinion then we will only be successful if those interests happen to be aligned with the common good.  I cannot imagine non competitive social welfare programs being able to go toe to toe with the barons of industry.   You don’t have to carry that logic out too far before you start to realize that “Brave New World” is closer than we think.

Predictions are generally a fools game but, there seems to be some things that we can rely on for next year.

The crisis in Europe is not over.

From the beginning of the Sovreign debt problem the European leaders and the Central Bank have reacted by doing the minimum amount required to stave off a complete meltdown.  That will translate into a few market hiccups during this year.

The saber rattling with Iran will continue.

As a result I would not rule out several huge price spikes in the price of oil.  Those price spikes, if they persist for any length of time will impact the pace of the present, if anemic,  American economic recovery.  Also there will be some significant trading volatility associated with the daily headlines.

It’s an election year

That always makes for some interesting market reactions as the bulls and bears vie for hyperbole.

All in all I expect that the markets will have an inordinate number of days where an up or down trading range of greater than one percent will feel like the new norm.