Monday, October 24, 2011

The Epic Ride Continues

It's been some wild ride since October 4th.  Since that date the Dow is up about 14%, while both the S&P 500 and the Nasdaq have jumped is up 16%.  That is a remarkable run but this is the market we live in now, where things jump 20% and fall 20% in the span of weeks.

We have seen similar rallies around quarter ends (the June 2011 rally rings a bell) and there is some chatter that this sort of rally becomes self-fulfilling because it helps to prevent hedge fund redemptions.  However, the greatest factor remains - the Euro's strength (for some unknown reason) and the corresponding dollar weakness.

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I find all of the uproar about the Canadian entry fee to be a little disingenuous.  First of all, the $5.50 fee wouldn't be charged to visitors entering via car, so frankly the economic impact would be minimal.  Second, the same people that are clamoring to secure our borders with more and more and more border security seem to be the first to complain about this fee.  Yesterday, as I drove home I saw 5, count them, 5 brand news Border Patrol SUVs pass me on Rt 12.

So, if you want all of this enhanced security - which I argue is overkill and provides little incremental value for every dollar spent - you have to pay for it.  Well, you could levy a tax on jurisdictions that are benefiting from all of the increased Canadian visitors - say a 1/4% regional security sales tax - or you can charge non-residents a small fee to help cover the soaring costs of protecting your border.  I don't like the idea of having this fee but if you strive to remove all risk from your world there is a price to pay and in this case that price is $5.50.

Cheers!

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