Scenarios 2014

How does the US stock market look today? Is this a brief rally before more volatility? No. It looks like we are coming out of the peak of the Ukraine fear. Sure, things could get worse, it's possible, but it doesn't seem likely. With both Ukraine and Russia asking the UN for help, this is more likely to be a very domesticated version of cold war politics. Little tit for tats, a jab here or a jab there, there is not going to be some massive central european war. Times have changed. Patterns remain, but times change. The SP500 hardly sold off this time (vs early Feb, does anyone even remember?), less than 5%. Nasdaq and biotech especially took the hit. Russell 2000 as well. Nasdaq and Russell were down 9-10%, biotech damage continues from the Gilead moment, when a letter was sent to US Congress concerning the extremely high price of a new drug. Look for Gilead eventually to defend themselves with the size of their research budget, and the probability that a single drug being successful is low. Going into a holiday weekend, markets closed on Friday, earnings mild, weather improving with the season. Pent up demand will come through in Q2. SP500 to reach toward 2050 sometime this year. German DAX likely to hit 10K, Nasdaq composite will drift up toward 4800, people will get nervous because they still remember March 2000. But this is not March 2000. At some point, that moment will arrive, the turning of the market from bull to bear, but not yet. If you have the time, read Minsky, read George Cooper (georgecooper.org), for the real deal on real markets.