It would be very unfair to gloat as the United States threw away an unassailable lead in the Ryder Cup at Medina but, as I spend my three days every two years being unshakably European, that is precisely what I shall do. Sorry chaps, it might not be cricket but it certainly is golf.
Meanwhile, the transatlantic cousins will be scratching their heads and wondering where it all went wrong. Was it unshakable self-overestimation? Was it arrogance? Was it the belief in their invincibility? As Prime Minister Rajoy tries to draw inspiration from Olazabal and his merry men – along with their invisible thirteenth player, the late, great Severiano Ballesteros – President O’Bama might take a look at what befell his countrymen on the golf course yesterday. Perhaps his greatest weakness – I have already commented that unless he treads on a major political banana skin which looks unlikely, that the election has to be in the bag. But then, yesterday morning, so was the Cup.
O’Bama’s Achilles Heel has to be his personal arrogance. His supporters would of course interpret it as being sound conviction that he has been doing the right things for the right reasons and that he intends to continue in the same way. But he risks slipping away in the same manner as his golfers. I bet he was all ready and cranked up to receive the victorious team in the White House rose garden, wrapped in the flag, rubbing shoulders with proven American winners while planning the photo opportunity of him holding that little golden cup. Sadly, for him, not to be.
“It’s the economy, stupid…”
Last week was not a good one in the US. Of the 32 releases reported by Bloomberg, only four or five exceeded expectations to the positive side. Monday was the best day with the CaseShiller house price complex looking a bit better than forecast and Consumer Confidence for September reporting in at 70.3, not far off the February 2011 high of 72.0. Countering the improvement in the CaseShiller were some very modest Pending Home Sales and, to close the week, a sharp fall in the University of Michigan Confidence release and a drop in the Chicago PMI to 49.7, the first time that this diffusion index has fallen below 50 since September 2009.
All the while, we ended the third quarter of the year without the customary trading patterns. The Dow had a halfway decent quarter, closing up 4.32% on the trimester but I don’t get the feeling that the weakness of the closing days had much to do with index adjustment and quarter end profit-taking.
We open this quarter and the five week run-up to election day in the US with the release of the September ISM – also expected to be in contraction mode – and we end the week with the key September Labor Department Payrolls Report. The White House will be hoping for the best for, although there is one more Payroll Report before election day, the release on Friday will be the one which will be on hand for most of the rest of the campaign. I imagine that the Romney camp will be praying for the worst - if you get my drift.
On Friday, Europe once again frightened itself while looking over the cliff into the abyss which a renewed run on Spain and Spanish debt might bring with it and I suspect that sovereign debt markets will be tip-toeing carefully today. The announcement that the Spanish banking system requires €60bn of new capital in order to be shored up will either be taken as good news – firstly we finally have a number to work with and secondly it is smaller than many had feared – or it will be dismissed a having been calculated on historical figures and having been out of date before it had even been committed to print.
Markets remain skittish and it is hard to predict what this final quarter of the year will bring with it. My guess is that equities will close higher, bonds lower and commodities will be slightly softer too.
Right; I suppose that I can put the coin back in my pocket.