Love Is All You Need…(and other colors of red)

Well, here it is, barely February, and the market is already off to the races! Despite all the fear of the debt ceiling debacle to come, and potentially even more tax increases on top of the big ones just passed a month ago, the S&P 500, which rose a very healthy 16% in 2012, is up 6.24% through Friday, February 1. Remarkable how fast it happens, and so unexpectedly.1

The Latest News

1. Jobs lost during downturn = 8.9 million. Jobs added during this very slow recovery = 5.1 million.2 Add in all the new people from population growth, and it is not a pretty picture. See JP Morgan chart below.

employment total private payroll

2. GDP fell 0.1% during Q4. Start of another recession? Hopefully not. There were a few special items to consider, such as a huge reduction in defense spending in Q4. Still, nothing to celebrate here.3


And Speaking of China…

Been on my mind lately, and I am not the only one. Eric Schmidt, CEO of Google, just published a new book, which was reviewed in the Wall Street Journal yesterday. The New Digital Age discusses a lot of interesting things about our changing world, but his take on China is worth noting. Very dark, essentially the dark side of cyberspace, and cyber warfare sponsored and controlled by the government.

china map with flag

The Economist also seems preoccupied with China lately. In one issue alone (Jan 19), they covered a number of huge issues, for better or worse. China looks as if it will be in the headlines and will be a major player on the world stage for some time to come.

China is building its navy and getting very aggressive with neighbors in the East and South China Seas, asserting claims to vast stretches of ocean and provoking armed confrontations. This latest article concerns Japan and a chain of small islands Japan controls, and a domestic drumbeat of war to come.  Let’s hope not.

China is investing billions of dollars around the world. While it is still new to this kind of activity, it placed over $77 billion in 2012.4 More to come.

China is resuming its rapid construction of nuclear plants. A country heavily dependent on coal plants, and we are definitely not talking “clean coal” here, they are anxious to develop their nuclear capabilities as rapidly as possible. With more than 25 plants under construction, they are the world leader by a large margin.5

Not surprisingly for an old fashioned coal powered country with lots of cars and old tech factories, pollution is off the charts. The picture of people doing outdoor exercise with masks in what looks like San Francisco fog tells the story. Apparently this issue has become even bigger in people’s minds than the rampant corruption and the infringement of person liberties.

Stay tuned. More to come.



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Love Is All You Need…(and other colors of red)

time to read: 2 min