Select Page

The bulls have partied well into the night and expectations largely suggest continued revelry. Granada adopts the perspective of the sober doorman and wonders if sufficient respect is being given to the risks ahead.

While their seemingly constant “glass half full” optimism is somewhat attractive, at times the bulls can get carried away with their enthusiasm for higher markets. They are admittedly no different in that regard than their counterparts, the perpetual bear, whose company is always accompanied by downtrodden expectations for lower markets and thus rarely welcome.

Unfortunately history has proven it financially destructive to attempt a game of Red Rover between the two camps, running from side to side in anticipation of the market’s next move. A dose of skepticism for both extremes seems to be a healthier approach. It is more reasonable to suggest that recognizing when one gets carried away that it may be best to shift tendencies towards the position lacking popularity at the time.

A review of the latest research reports from Wall Street suggest the bulls appear to have spent the better part of the evening at the free flowing trough of QE2 (quantitative easing, part 2), oblivious to the notes on the door announcing changes, most notably on June 30th. Inside there are even a few dancing on the tables, joyously requesting that the band play just one more song and offering a raised glass cheer to newcomers with the familiar line, “Be Bullish!” All the while the bear tries to catch some sleep nearby, growing tired of the revelry and frustrated by the crowds. He’s largely forgotten though, having been in hibernation since March of 2009.

The perpetual bulls of Wall Street may be a likeable lot, but they certainly can’t be trusted. Their mantra is always the same. They miss nearly all the pitfalls, inappropriately suggesting followers who are focused on the long-term aren’t to be concerned with such events. The bears are correct even less frequently, making their announcements and warnings worrisome, but largely irrelevant.

At this time of evening only the doorman is sober, responsible for collecting increasing cover charges for those anxious to join the party of past performance. As the crowds gather, he recalls the uncanny ability of the masses to arrive just before closing time. Tonight they have arrived in response to the Fed’s advertisement for an extended happy hour – a promise to inflate asset prices indiscriminately and frustrate those who stay home with dismal yields. The Fed has ensured the taps would flow. Congress has served as an excellent guest bartender. They’ve even offered to keep the now unsightly tabs behind the bar and presumably pass them out another time.

So while it is never popular to pass on another round, let alone announce plans to go home early, there does seem to be a general disrespect for the risks ahead. The Fed has indicated they are inclined to let up a bit on the free flowing drink of choice. A growing number of Congressmen appear to have simply grown tired of this bartender gig. Some admittedly fear the repercussions of returning home with a pocket full of unpaid tabs. Announcing when the music will end is as difficult and irresponsible as selecting May 21st for the second coming, but those who have enjoyed the party should keep at least an eye on the exit in the event the kegs start floating.