With ten sessions to go before the end of 2013, investors are already getting nervous. They are restless because they are not seeing the traditional "Christmas rally." But yesterday they did start to see signs that Father Christmas will finally leave one present: stocks are rising.
Traditionally, gains are stronger during the last week of the year than in the first. Still, the year will not pan out as expected for most European markets with the exception of Spain, Germany and Switzerland. These countries will finish the year with 15% gains. Despite the mild disappointment, there is still reason to be hopeful.
For example, last Monday's fed meeting is important. If Ben Bernanke announces that the Fed will keep pumping money into the US economy after he steps down, gains in the US and across the world will continue. If he cuts the stimulus spending, then global markets will reverse.
Experts expect that he will leave this decision in the hands of his successor, Janet Yellen, who does not seem to be in a hurry to stop the stimulus plan. The United States is flooding other countries with dollars, and because they are paying for oil with this money, the effect is the same as taxing foreigners.
Brussels should finalize agreements on banking unity this week, which would also help markets, especially if corporate earnings reports are up. Certainly, a cocktail of good news will be necessary for the markets to jumpstart a recovery in 2014.
