Trading volumes have been low all month and minuscule this week.  Both Asian and Europe were down somewhat overnight.  The news out of Europe is disappointment that the meeting between Sarkozy and Merkel produced nothing, except an agreement not to disagree in public.  Ominously, interest rates continue to rise in Europe.  The futures market indicate the Dow will lose about 70 points at the open.

I confess to being very worried about a European collapse.  It will take real political courage to connect their common monetary policy with their individual fiscal policies, and political courage is a rarity among elected politicians everywhere.

It is tempting to ignore the tax consequences and sell everything, to remain in cash until there is greater clarity.  Yet, at any time, Sarkozy and Merkel, as well as the heads the EU and IMF and ECB might walk onto a stage to announce their “bazooka” agreement, and the stock market would roar.  Cash levels should be high now but certainly not 100%.