US Stock Market Is Priced Relatively High

The exchanges on the far right may be a little 'exuberant.'

For the US, this is an artifact of monetization flowing almost directly to the financial sector. I am not sure how to account for India and South Africa, and some of the others except to say that a few are obviously riding the China 'miracle.'

As an additional datapoint, stock exchange margin debt has reached highs not seen since before the collapse of Lehman Brothers. Margin Debt

Austerity is taking an obvious toll on the economies and the markets on the left.

As in the case of a nation's currency, God bless the child that's got its own.

At least for a little while.

As a rule of thumb, a wise nation and a free people never surrender the control of their sovereign currency to another.

Bonne Année - Happy New Year

"Do not be preoccupied with the wicked, or envy those who do evil. They will dry up and wither away like the grass and green plants.

Trust the Lord, and do good things. Live in the land, and practice being faithful.

Be happy with the Lord, and He will give you the desires of your heart.

Conform your ways to His, and He will sustain your efforts. Your righteousness will shine like a light, your just cause like the sun.

Surrender your self to the Lord and wait patiently, abiding in Him."

Psalm 37

Merson, Rest On the Flight Into Egypt

Gold Daily and Silver Weekly Charts

A sharp rally in the metals today along with stocks, on the last day of the year.

Gold extended its longest bull market since 1920 with a modest 7 percent gain for the year. Stocks returned about 13 percent, and bonds eaked out about 4 percent depending on duration.

In a period of inflation stocks may do well. In stagflation, not so well depending on how the expansion of the money supply and tax gimmicks are wrapped up in policy and the delivery of monetization. Multinationals may outperform depending on the evolution of global trade, policy, and the currency wars.

And as for me, I suspect that we haven't seen anything like a top yet in the metals. The printing presses and de facto defaults are just getting underway.

Non-Farm Payrolls number on Friday, and the fiscal cliff follies will enliven the Congress for the rest of the week.

There is a chance that they will kick the budget cuts can down the road, and merely prevent those making $450,000 or less from a repeal of the Bush tax cuts.

I would suggest that you keep an eye on those rowdy boys in the House.

Have a safe and Happy New Year.