An organization that is supposed to represent the interest of 59,000 Catholic nuns has come out in favor of the Senate version of the health care billdespite language that allows Federal money for abortions. I didn't think there were 59,000 nuns in the world. And I don't need that many to tell me anything.
It used to take just one that would make me jump for my life.
Sister Lydia remains the most vivid. She didn't buy my older sister's act at all and when I showed up a few years later her comment was something to the effect of "Oh, you're one of them." I was never quite sure what "them" was and I was not going to ask.
If there are really 59,000 of "them" backing this bill then it might be taking on a sense of inevitability. Dale Kildee of Michigan studied for the priesthood for six years before he went to the dark side and became a politician. He's now voting for the bill which is a big switch in the Catholic vote. It's impossible to say what the playing field looks like. At the beginning of the day Thursday Speaker Pelosi was apparently still searching for ten votes. The House has agreed to let members have 72 hours for review of the reconciliation bill and the Congressional Budget Office's cost analysis before a vote. It looks like it will spill into next week.
And surprise for Angela Merkel and the rest of Germany, but it looks like it's all their fault. That's the latest blame game scenario in the Euro zone. If Germany were not so export centered and so good at it, the rest of the zone could be exporting their way to heaven. Some politicos from other nations say Germany has to stimulate its internal demand via government spending or tax cuts. The insensitive Germans are making it hard for other countries to recover by being so economically efficient. It's tough to figure that one since they have a shared currency, but whatever.
Merkel is having none of it.
It looks like Germany could be on a collision course with their partners. Angela said that the "Euro zone must have the option of removing from the currency bloc member states who repeatedly fail to comply with governing fiscal rules." This is pure posturing as it takes a unanimous vote to expel a country. Greece has countered by saying they need a clearer plan or they might be forced to turn to the International Monetary Fund (IMF) for aid. Germany, they complain, has been vague about the level of support and what it would take to trigger a rescue. It could be that the average retirement age in Germany is a good bit over five years more than it is in Greece. I could understand not wanting to fund someone else's retirement. (Don't fear, dear reader, I am never going to retire. I might be forced to play more golf and I won't do that to myself or any golf course.)
There is an EU summit scheduled for March 25 and 26. Germany's position seems to be hardening going into this meeting.
Over 40% of Germany's economy is export dependent.
It's not as large in China, but large enough. The China Council for the Promotion of International Trade did a study and found that revaluation of the renmimbi would be "disastrous" for labor intensive Chinese exporters. They allege that garment and furniture manufacturers work on only 3% margins to begin with and a currency revaluation would crush them. But at the same time a "stress" test of 1000 companies in 12 industries was done to see the effects of a revaluation. The market is speculating this may be in advance of a move to allow the currency to float for at least a little while. I would doubt that, though. The currency card is a strong suit for the Chinese and why would they play it without something in return.
We, and the rest of the world, wonder what to do about the threat of a nuclear Iran.
Washington has ineffectively tried to lead an international group to apply sanctions toward the rogue state. China gets half of its oil from the Persian Gulf and 11% from Iran. China exports gas to Iran and the Chinese state oil companies have some joint ventures in that country. Why would China follow Washington on this? Instead of a Washington solution could China want a big splashy debut on the world stage as the new power broker structuring a solution to the Iranian issue? For that they might bargain on a revaluation, but they aren't going to be told what to do. Not by anyone. Not by 130 politicians in Washington wanting them named a currency manipulator. We need to finance trillion dollar deficits for some years and they have $2.4 trillion in reserves increasing an average of $30 billion a month.
What are we doing?
At least inflation continues very much under control.
The CPI on Thursday showed headline CPI is up only 2.1% year over year, and the core rate only 1.3%. The average P/E multiple for the market has been a touch over 18 times when inflation has been 2% or less. Fade that just because, and use a 15 number. The consensus for earnings for the S&P this year is about $77. It's maybe $85 for next year and rising. One major house has a $91 estimate for 2011. Put 15 times on the consensus and your upside target gets to 1250-1300 for the S&P. That upside potential over the next twelve months gives a good risk/reward ratio against the possibility of a standard 10% type correction that happens often after the type of run-up we have seen.
Vincent Farrell, Jr. is chief investment officer at Soleil Securities Group and a regular contributor to CNBC.