Tuesday, March 23, 2010

3/23 mid-morning

I1 small uptrend to 4/2.  Blue chips trashing around near January highs.  Not going long, can't go short unless
DJI hits flash-point 10,605.
Silver down 15c overnight.  Placing stop .55% beyond the 30-hour M/A on an hourly closing basis. This is 17.10 on an hourly close.

4 comments:

  1. STEVE, I OVERLAYED A UTITLIES CHART OVER THE DOW, 10 DAY,HOURLY, 30 DAY DAILY,90 DAY AND AND THEN ONE YEAR FOUND IT VERY INTERESTING. DO YOU THINK I HAVE SOMETHING HERE OR IS IT MY IMAGINATION?

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  2. The weakness of the Utilities relative to the other indices is a reflection of long rates, which are on the rise, and over which the Fed has little control. Look at chart of TLT or long treasury rates.
    Currently the rest of the world has started removing monetary stimulus. Upward pressure on government bond rates around the world will likewise pressure world stock markets. In the U.S. various factors are pressuring long rates higher through April. Amongst them:

    a)the fiasco of state governments' finances (2011 will see $142 B state deficits that will need to be plugged up with new bond sales),

    b)Fed removing auction facilities, discount rate hike causing some treasury selling at major banks and cutting profits somewhat (money is only next-to-free, not free),

    c)the continuing wariness of trading partners to increase U.S. bond exposure in line with U.S. bond issuance. Total foreign holdings up a paltry 17 B in December to 3689 B. Central bank holdings declined 30 B. This while treasury auctions are skyrocketing.

    Eventually rising long rates in an economically flat world economy will prove poison to risk assets. These rates reflect the private sector reaction to worldwide monetary stimulus and will continue to rise as long as stock markets advance (reflecting the liquidity). Theoretically this should brake the market advance, but with short rates near zero the Fed is encouraging speculation. Currently many are betting an inflationary outcome is all but ensured. I disagree. Inflation will only come when people borrow and people lend. I don't think the markets will give the Fed enough time to re-infect us with more private debt. When long rates rise high enough in a soft economy the markets and the economy will react.

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  3. I see deflation, a rising dollar, falling gold prices and the stock market falling, 1930 all over again. Your right at some point people are not going to buy are debt at these yields and the bond auctions will not go well. At that point the feds have lost control(up goes rates and there is nothing any one can do about it). Thats the problem with trying to inflate your way out of this mess. You think if you can just borrower a lille more it will get you by until things turn around and they never do. BK

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  4. The hourglass is running out. World events will catch up with the little island that social planners think they can build. "If we can only get the good from evil capitalism and legislate away the bad then we will have a utopia". Of course the manipulators would never utter such words but by "discovering" the wonders of fiat money and slowly building up their reliance upon it over the decades we wind up in a quasi-socialist state, with government control the only wellspring of growth and the only "control" on the wickedness of capitalism. They will never comprehend, much less acknowledge, that their actions created the dark side of market forces (i.e., uncontrollable reactions to extreme monetary conditions).

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