Following Friday’s buying stampede — in both stores and equity markets — there will be a tendency to discount the bad news, and declare all is well in the world.
Black Friday Retail sales will be interpreted and extrapolated to mean there will be no recession, its doubtful of even a slowdown, the worst of the Housing and Credit Crunch is behind us, and the markets will be just fine.
I am not a buyer of that pablum.
In a paroxysm of fear, coupled with a small salting of reality, Retail stores pulled out all the stops for this holiday season: They opened on Thanksgiving Day or 4 am Friday, they discounted early and often, they slashed prices at the expense of their own margins.
Consumers rose to the bait: They continued spending more than they could afford, only instead of tapping home equity, they went to their credit cards. However, the total weekend sales were not nearly as rosy.
Despite the obvious absurdity of it all, this will be deemed economically positive by the usual suspects.
This now sets up the final rally of the 2002-07 bull run. We should see a decent (but not great) year end run. As stocks trade higher into December, it creates an ideal opportunity for many to reposition their portfolios, batten down the hatches, and await the storm.
More on this later . . .
Update: Or not!