Wednesday, March 17, 2010

Market Commentary By Art Cashin [ubs investment research] March 17, 2010 $ubs

On this day in the year of our Lord 389, there lived a foin broth of a lad who was.... dependin' on the boyographer ye read: a Spanish peasant, a French herdschild, a Celt from Bannavem or a Gael from Dumbarton, Scotland. At any rate, at age 16 this lad was kidnapped by pirates and sold to one of the only 2,500 Irish kings that were reigning at the time. He served this King as a swineherd mucking out stys and such. For six years he labored in slavery, poorly fed; often beaten; surrounded by people who spoke a language he couldn't understand. Then he discovered that six years of such treatment was equivalent to a parochial school education. So he became a Catholic and escaped to France to become a monk.

Upon becomin' a bishop he mistakenly perceived the French to be a bunch of snail eatin', grape juice drinkin', truffle huntin' toads. He longed for the emerald green fields of God's own land and the special amber holy water found there.
He returned to Ireland which was still under the influence of a group of heathen English druids and a few nocturnal banshees. Nonetheless, he set about convertin' and baptizin'.

Unfortunately Patrick was not an MBA and, therefore, did not know the law of diminishin' returns. So he managed to baptize over 120,000 people, built over 300 churches, chased the snakes out of Ireland, developed the shamrock and established a factory to make pennants with the slogan "Go Notre Dame".

To celebrate the life of this fabulous man, sing ye some sad songs, talk ye merrily of battles and take ye a wee nip of somethin' till ye might be seein' da little people.

It was not the little people that bothered markets yesterday. It wasn’t even the little changes in Fed language. What moved the markets was movement in the Euro – and that was not so little.

Currency Curse Continues Complicating Life For Commentators – Market pundits scrambled to fill up air time by attributing the market movement to this data or that comment. The market rally catalyst was quite singular however.
As rumors spread of a firmed up Greek rescue package, and the S&P suggested it was shifting Greece out of ICU, the Euro soared. It spiked 0.7% which is a significant move in the currency arena.

The result was immediately evident and dramatic. Gold spiked $20 and oil shot up over $2. Those moves came long before the FOMC statement. Those moves were not influenced by some piece of economic data. Those moves were not the result of some shift on the outlook for the President’s health plan. Those moves were the direct result of the jump in the Euro and the correspondent weakening of the dollar.

We believe that the Euro/Dollar move was also the primary catalyst in the stock market. Given the action in gold and oil, the stock market’s reaction was rather mute. With such a strong tailwind, you might have expected something like a 100/150 point move in the Dow. The real question on stocks was what was holding stocks back given the currency boost.



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