A Growing Wall

The wall of worry got considerably taller this week as Dubai suspended payment on its massive debt load.Just when Americans were hoping to get into a party mood,a city many may not have heard of lopped a few percent off their recovering portfolios.The reflation trade was stopped dead in its tracks as commodity prices and equities plunged.It happened on a Friday,no less,leaving investors with a good few days to wonder what they are dealing with.The specter of commercial real estate,which had been put aside as a known quantity,burst on the scene with an unpleasant surprise.Is it just an anomaly or the tip of a new global iceberg?One can only hope that a week from now the holiday mood will be back on course on Wall Street and its satellite portfolios.

On Thin Volume

It's been noted repeatedly that the recent trading has been on thin volume.With next week being Thanksgiving week,that isn't likely to change.When trading volume is light,the market lacks a certain something-the ability to convince.It means there is an abundance of caution on the floor.In the current case,it also means the retail investor is still absent from the process.There's a lot of money on the sidelines,we are told.If the sidelines go on and on,they aren't sidelines anymore;they are the playing field.A new normal has arrived.It's like the aftermath of battle.We stand in the financial rubble,all too glad to get out for a day,eat some holiday food and watch some sports with our long-lost families.Only the equivocal data suggest the post-holiday won't be any different from the pre-holiday.The long,slow healing is our way of life for the foreseeable future.

Shopping Season More Critical

This year,the holiday shopping season is even more critical than it usually is.The Reuters/University of Michigan's consumer sentiment index for October was released today.It showed a decline from 70.6 in September to 66.0.This does not bode well for consumer spending.Although earnings have been generally good to this point,a lot,but by no means all, of the success is down to cost-cutting.Companies have shown a remarkable capacity for increasing efficiency.At some point,however,the consumer is going to have to step up more than they have done so far.If not now,the biggest shopping period of the year,when?If they do not step up now,we are looking at the significant possibility of a stagflation scenario.That would overshadow the good spirits that have characterized the equity markets of late.One can only hope the pocketbooks will open in time to avert all manner of difficulty.

Microsoft Triumphant

David Darst,a leading strategist with Morgan Stanley Smith Barney,is recommending Microsoft as an investment.He likes the company's chances based on the success of Windows 7.I can personally attest that,despite the great reception the new operating system is getting,Microsoft remains committed to its Windows XP customers.It is assiduously updating and checking the older system even as the new one is rolled out.This will continue for five years,it has been said,based on past experience with Microsoft.That's a big comfort if you had purchased a Windows XP machine this past summer or even later.You won't be left alone in oblivion.Microsoft's loyalty to you will inspire reciprocal feelings.That's plain good business on the multinational's part.