The headlines today scared me a little bit. First, I read that Germany's consumer confidence index has fallen, again, as a result of the relatively stronger dollar and fallout from the slowing the US economy. Similarly, Marks & Spencer, the premium UK retailer, has reported slowing growth and staff cuts in response to the same growth concerns. Likewise, Morgan Stanley is reporting that it's planning job cuts for its Japanese offices. If there's any doubt that the world economy is only beginning to slow down, then reports such as these should give you second thought. That, however, is not what scared me this morning.
What continues to worry me is the American investors' apparent refusal to see or believe any of it. Whether it's the report of inflationary pressures right in their own backyard or the many companies reporting lower earnings, investors are ignoring the bad news and looking only for the good stuff that confirms what they already hold to be true. Yesterday's rally and today's headline stating lower volatility is representative of growing buy-pressure only further America's case of the blind following the blind.
Lower volatility, over the period of one day, does not mean that there is less uncertainty. Any statistical change over a period that short cannot be interpreted to mean anything - it's just not relevant. It's really time for Americans to wake-up and smell the coffee; Europe is only now beginning to feel the pinch from what's been developing on this side of the bond for the better part of this year and that too will take time. This is only the beginning folks and the sooner that we realize this as a country, the sooner we can 1) save to give ourselves some recovery insurance, and 2) truly plan and prepare for a recovery.
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