The recent pullback looks tempting.
I don't know about you, but my trigger finger is starting to get itchy. With the FTSE 100 shading 5,600, it is starting to look like a tempting time to start gunning for stocks.
I said starting. Because this could only be the beginning. There might be plenty of tempting targets in the troubled months to come.
To LTRO and back
I knew it couldn't last, that shock first quarter rally. I stopped buying, waiting for the backlash. Why? Because aside from some feisty US jobs numbers, there was no strong fundamental reason for markets to fly.
The main market driver was phoney, another burst of loose liquidity, this time courtesy of Mario Draghi at the ECB and his €1 trillion long-term refinancing operation.
Ever since the financial crisis, stock markets have become hooked on central banker stimulus, and they show no signs of kicking their addiction.
In February, HSBC produced analysis showing how markets just love that QE sugar rush. They were mad for it in Japan between 2001 and 2004, and the US and Europe after 2008.
In the US, stocks rose on average 6% after each bout of virtual money printing. They rose 8% in the UK and 15% in Europe. Every time central bankers turned off the taps and let their balance sheets shrink, markets suffer rapid withdrawal symptoms.
That's what has kept markets going since March 2009: QE1, QE2, LTRO, and until recently, the prospect of QE3.
When the Fed recently poured cold water on QE3, markets took an instant bath. Last week's disastrous Spanish bond sale added some ice, and as LTRO winds down everybody catches a chill.
Trouble and strife
Politically, it's going to be a rocky summer. In May, there are elections in Greece. Who is going to vote for more austerity over there?
There are elections in France, where Nicolas Sarkozy could easily lose to socialist candidate Francois Hollande, who has pledged to rewrite the eurozone's hard-fought fiscal pact.
The real action could be on the streets, where civil strife Greek-style could easily spread to Portugal, Spain, Italy and France. I can't see any feasible solution to the imbalances caused by the euro, except the death of the single currency. There will be a lot of pain before EU politicians let it die.
Till debt do us part
Every single one of these events could spell disaster for Europe. It's tragic, and I don't welcome it. But it is a great opportunity for investors.
Europe is hurtling headlong back into recession, killing itself with self-inflicted austerity. Its banks have a crazy €600 billion in redemptions this year. Italy has to refinance €600 billion of debt over the next three years, Spain has to roll over €300 billion.
The US is no longer sitting so pretty either. Its latest set of employment figures weren't nice to look at. And it still owes an awful lot of money.
Don't be fooled by Wednesday's fightback. Markets were celebrating a successful Italian bond sale, failing to notice that these were three-year bonds, and therefore covered by LTRO.
Yes, I see more buying opportunities ahead.
What will the Germans say?
I've got absolutely no idea how low markets can go, but I'm not expecting a wipeout. If markets fall, say, 10% from here, the Fed will inject more stimulus faster than you can say QE3. The Bank of England might add to its £325 billion of bond purchases, too. And the ECB may finally slash base rates below 1% and embark on full-blown money printing, whatever the Germans say.
Stock markets will no doubt respond in the time-honoured way, although with less enthusiasm than before. So don't squander the summer looking for the perfect time to buy.
But as I said, my trigger finger is getting itchy. I'm ready to lock and load.
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