Talk is Cheap!

Here we go again.  Same topics in the headlines; can Greece renegotiate their debt, how can the European Union raise more funds to bailout bankrupt countries, can our own government agree to terms in order to raise the debt ceiling, blah blah blah…

Think what would happen in the business world if the only thing employees did was talk about what to do, but never actually come to a solution and/or executed any plans.  I’ll tell you what would happen, people would be fired!  In addition, how many times do I have to read about France and Germany having another meeting in an effort to find a solution?  I want to know what goes on at these meetings, because they’ve been having a lot of them over the past several months.

FR: “Well Germany, we really need to do something.  We lent a helluva lot of money to a bunch of countries who have no possible way of paying us back.”

GE: “I hear ya, you guys did lend a lot.  We’re still not sure why you did that.”

FR: “What if we print more money?”

GE: “Can’t do that, our people would not be happy paying for someone else’s ignorance.”

FR: “Yeah, I hear ya.  Oh, would you look at the time.  What do you say we finish up the statement we’ll make to the press and then get out of here?”

GE: “Sounds good.  Meet again next month? You’re place or mine?”

I’d like to circle back and tie in the current state of the stock market with the state of government demise.  The S&P 500 has risen about 24% since the beginning of October 2011.  One of the things I find interesting is the lack of volume or participation in the rally.  The following is a chart of SPY an ETF that tracks the movement of the S&P500 index.  Look at the lack of volume during this entire rally.

 

As you may know, I am not overly optimistic regarding the ability of the US economy or other global economies to continue on this path of good earnings without some significant impact from the European fallout.  Once they are forced to deal with the issues as opposed to just talking about them, earnings will be impacted and stocks will get cheaper.