No Santa Claus rally for global equities this year

It is hardly difficult to predict that there will be no Santa Claus rally for stock markets this year. Time is almost up. It is also unusual for stocks to be down in December, traditionally a time of buying and not selling equities.

Even the unlikely figure of ECB president Mario Draghi could not inject much festive cheer with his $645 billion of cheap funds for 523 eurozone banks yesterday.

The immediate question was why so much for so many if there was no problem. And then the deeper analysis found that this sum netted out at rather less and actually fell far short of the amount needed to offset a $3 trillion deleveraging by eurozone banks next year.

Recession coming

Reason enough to see a recession in the 17 nations of the eurozone and by extention the 27-nation European Union in 2012. It is already in the global trade statistics.

Exports from Japan crashed 4.5 per cent as early as November. The Asian exporting collosus is slowing down with Chinese exporters also all talking about a severe slowdown in orders.

Going into a recession of unknown duration and depth you would hardly expect global stocks to be rising. Oracle’s warning that it would miss targets for Q4 is a reminding that global business is highly interlinked and a butterfly moving its wings in Japan can cause a storm off California.

Of course we are now in the holiday period for financial markets and things will not really get going again until the New Year. Perhaps the best Santa might have to offer is a period of relative calm until then.