By John Galt
December 30, 2011 – 07:43 ET
While many a commentator and bubblevisionista will argue that 2011 was a “safe” year with the Dow up about 6% for the year and the S&P 500 treading water but up slightly, the decline in the NASDAQ is the lesson of the year and a warning sign for stocks in early 2012. Traditionally during an election year markets rally as the election gets closer and I expect 2012 to be no exception. While timing is everything, and mine sucks as I will readily admit, events occur for a reason and none of the causes of what I feel will be a substantial market decline have been corrected or systemically repaired.
This morning is a prime example with the Japanese Yen breaking parity against the Euro (100) for the first time since June of 2001. The chart this morning from ForexPros.com is a leading, not lagging, indicator of the coming crisis in the Eurozone about to explode again:
A break below 99 and all bets will be off as this means investors are wagering on a collapse of the European Monetary Union (EMU) as currently structured. Unfortunately for the banksters who gambled and lost, the EMU can not exist with the weak nations, the PIIGS, existing within the system but without Italy and Spain it ceases to function regardless. Thus why the next 120 days will prove eventful and critical not just for an economic stability pact, but quite probably to prevent the eruption of violence on the European continent as the communists and other radical groups exploit the discontent of the populations affected.
Look for the markets today to see a LOT of window dressing with a probably close in the green. Gold is being reacquired this morning as the shorts cover going into a long holiday weekend and silver is not far behind. The Euro should be sold off going into the close of FOREX trading as the players elect to not gamble on another miracle in Brussels which has been promised since 2010 yet never delivered.
As many would say to 2011, good riddance.
Be careful however of what one wishes fore as 2012 could become the year of the bear, the tiger, and fire.