It's Beginning to Look a Lot Like Christmas

If Santa Claus Should Fail to Call, a Bear will Come to Broad & Wall

That has long been an expression on Wall Street that if a "Santa Claus" rally does not magically materialize in late December, there could be trouble for stocks in the months ahead.

With that logic, the sleigh ride should continue into 2015, as the market continues to make new all time highs. The Dow crossed 18,000 for the first time ever, yesterday, while the S&P has scored more than 50 record closing highs.

That's the second highest total since 1995 when the market set 77 records that year.

Despite a mid-December dive, the Dow recovered 1,000 points since December 16th, keeping with the tone of the season.

The fundamental thesis for owning stocks remains intact: a strengthening US economy, (today's jobless claims data and yesterday's upward revision to Q3 GDP- 5% growth!) add to the proof, while solid consumer spending means the holidays are a joyful period, as well.

The huge drop in oil, gasoline and natural gas prices, are giving consumers extra disposable income at time when "want is most keenly felt," to paraphrase Dickens.

So, in many ways, it is the best of times at home, while it is the worst of times in other parts of the world.

Lumps of Coal

The rest of the world is not so merry. While there has been a holiday respite in Russia, as there ruble has rebounded from record lows two weeks ago, there are lumps of coal in the stockings of other countries and continents.

Europe is hoping for a post-holiday present from the ECB, come January 22nd, when it meets again. Visions of QE are dancing in the heads of Europeans who are waiting for Mario Draghi to don the red suit and give the European economy a gift that could keep on giving.

So too in Japan, where Abenomics will get a second chance.

China faces real difficulties which may become more evident as the new year wears on.

2015 is the year of the goat in China ... a role China may play in the world economy, as it gets blamed for slowing down the rest of the world and, possibly, precipitating some sort of financial crisis, if their over-leveraged financial system falls apart.

OPEC, Russia and the Middle East will be areas of concern once again, but my next post will focus more intently on risks for 2015. For now, I am just pointing out that we're getting the visit from St. Nick this year while he passes by most other countries, leaving very few goodies behind.

Happy Christmas

So, in short, enjoy the holiday week. Happy (belated) Chanukah! Merry Christmas! I will post again before the new year begins. In the US, barring any surprises, 2015 may be another "year of the Bull" here at home!

Cheers,

Ron

Posted to Insana's Market Intelligence on Dec 24, 2014 — 11:12 AM

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