Earnings season kicked off this week. But overall it was a pretty quiet.
Spain was downgraded by S&P to BBB-, which is one notch above junk status.
Some U.S. economic data pleasantly surprised to the upside: initial jobless claims plunged, consumer sentiment surged, and inflation expectations dropped to a multi-year low.
Meanwhile, the best economists and analysts guided us through these persistently uncertain markets.
Jim Bianco Has A Surprising Theory For How Mitt Romney Is Tanking The Market
The most interesting comment came at the end, when he talked about the fact that the markets have been falling ever since Romney started surging in the polls after the debate.
Our assumption was that this was a spurious coincidence, and that the market doesn't have anything to do with Romney. The most interesting thing, we figured, was that it at least flied in the face of the idea that a Romney win would be much better for the market, and that thus the Romney debate win should have been bullish.
But Bianco was insistent that there was an explanation. A Romney win would mean Bernanke out, and a likely much more hawkish Fed, perhaps helmed by monetary economist John Taylor, who has been a big opponent of QE.
Dylan Grice Is Watching Three Developments Very Closely Right Now
Inflation expectations – Grice is concerned about the monetary easing being conducted by the world's largest central banks right now. His fear is that they could lose control of inflation – and if they do, Grice said inflation expectations are the first place he thinks we will see signs of that happening.
The fragile social situation in Greece – Grice cited the rise of the right-wing extremist Golden Dawn political party and its harassment of immigrants as especially worrying. "What's chilling," Grice said, "is that the police are turning a blind eye."
Rising tensions in Iran – Iranians are becoming frustrated with the loss of purchasing power they faceas Iranian president Mahmoud Ahmedinejad pushes inflationary, easy-money policies. Grice said those policies are always the result of desperation on the government's part.
JP Morgan's Tom Lee: The Bankruptcy Purge Of 2012 Is Mega Bullish For US Banks And Housing
"But a tailwind is building in 2013, in our view, which is the resetting of the credit scores for millions of Americans. The peak year of personal bankruptcies was 2005 and those records are removed from credit reports after 2012. Thus, beginning in 2013, we should see rapid improvements in the credit quality of millions of Americans."
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