comdr wailer: Welcome to the new market - Howard Gold's No-Nonsense Investing ...

Saturday, March 30, 2013

Welcome to the new market - Howard Gold's No-Nonsense Investing ...

By Howard Gold

NEW YORK (MarketWatch) ? This past week, investors and talking heads looking for something to worry about cast their eyes eastward to the Mediterranean island of Cyprus, where a banking crisis threatened to unravel the euro zone?s fragile peace.

The final deal forced investors and big depositors to dig deeper in their wallets to liquidate one weak bank and save a stronger one. As of Thursday morning, banks had reopened and the Cypriot government imposed strict withdrawal limits.

Investors responded with a gigantic ho-hum as European markets rallied Thursday. The Italian election, which resulted in a stalemate and no new government, also has produced big yawns.

And have you heard anyone wringing their hands about the budget gridlock in Washington lately?

After 2-1/2 years in which political events repeatedly shook markets ? from the first Greek crisis in 2010 through the ?fiscal cliff? deal of New Year?s 2013 ? we?re finally at the point where politics don?t matter.

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The absence of big elections this year (except in Germany, which we?ll get to later) has combined with a calmer euro zone and a less crisis-prone Washington to produce a more ?normal? market environment in 2013.

That?s why economic growth, earnings, valuations, and seasonal trading patterns, not politics, will move markets for the rest of this year.

And, of course, the Federal Reserve?s loose monetary policy continues to support higher equity prices.

Read Gold?s view of why Marty Zweig?s ?don?t fight the Fed? still matters on MoneyShow.com.

It?s a stark contrast with where we?ve been.

In spring 2010, Greece requested a bailout and the European Union and International Monetary Fund eventually agreed to a ?110-billion rescue. The Standard & Poor?s 500 index /quotes/zigman/3870025 SPX +0.41% ?lost 16% from its April peak before rallying again after Federal Reserve Chairman Ben Bernanke announced a second round of ?quantitative easing? in late August.

Greece got a new bailout in 2011 ? just about when the debt ceiling crisis prompted S&P to lower the U.S.?s AAA credit rating. The S&P slid 19.4% from its late April high, and global markets lost even more in what may have been an abbreviated bear market.

A market free of politics would be a nice change, writes Howard R. Gold.

Then came 2012 with a French election that brought Socialists to power; a drawn-out U.S. presidential election campaign; a power struggle in China, and another outbreak of the European crisis, this time involving Italy and Spain, the euro zone?s third and fourth largest economies.

But in late July European Central Bank chairman Mario Draghi vowed to do ?whatever it takes? to save the euro, and global markets rallied. Since June 2012, the S&P has risen 22% and is now within a hair of its all-time high.

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