As the chart below shows, BAA bonds are yielding more that 200 basis points more than similar maturity Treasuries.
As recently as July of 2007 spreads were 40 basis points lower.
Friday, October 12, 2007
Corporate/Treasury Spreads Widen
In a further confirmation of the problems in US debt markets, corporate bonds are being pushed farther off US Treasuries.
As the chart below shows, BAA bonds are yielding more that 200 basis points more than similar maturity Treasuries.
As recently as July of 2007 spreads were 40 basis points lower.
As the chart below shows, BAA bonds are yielding more that 200 basis points more than similar maturity Treasuries.
As recently as July of 2007 spreads were 40 basis points lower.
Thursday, October 11, 2007
Credit woes push CDs farther off Treasuries
Markets are giving us a good estimate of the cost of borrowing for CD issuers.
As the chart below shows, CD rates are relatively constant over the past year or so, while yields US Treasuries have fallen substantially.
Spreads have widened to more than 150 basis points in the past few months as investors have bid up Treasuries.
The question investors will now be asking is "Will the spread continue to widen?"
As the chart below shows, CD rates are relatively constant over the past year or so, while yields US Treasuries have fallen substantially.
Spreads have widened to more than 150 basis points in the past few months as investors have bid up Treasuries.
The question investors will now be asking is "Will the spread continue to widen?"
Thursday, October 04, 2007
Stock market surges following record volume
The NYSE Composite Index is bumping against record highs following record volume back in August of 2007.
As the chart below shows, stocks are still in a bull market, begun back in early 2003, and will continue higher until the Fed signals the end of monetary expansion by raising short-term rates again.
INFLATION AND THE STOCK MARKET
If inflation is coming, as we forecast in a previous weblog entry, stocks will outperform bonds by a substantial margin - perhaps as much as 10% - until the Fed realizes how badly it's blundered and starts raising the Fed Funds target again.
As inflationary pressures push into the economy, businesses will use this opportunity to raise prices on all goods and services, fattening income, earnings, and dividends.
INFLATION AND THE VALUE OF THE DOLLAR
Inflation is also lowering the value of the dollar against most trading-partner currencies, making imports more expensive, and raising domestic US prices.
The lower-valued dollar will also make exports cheaper, boosting the sales and stock prices of major US exporters.
ASSET ALLOCATION
For all these reasons Paterson Financial has moved a portion of the portfolio out of two year notes and into the NYSE composite.
The fraction of assets held in fixed income securities should be reduced to no more than 30% of assets and aggressive managers might go as low as 10% in fixed income securities.
Very aggressive money managers will consider dividend-free equities as typified by the NASDAQ 100.
Notice the index has more than doubled since the lows of 2002 and will lead the way as stocks trade higher.
If the index doubles again in the next 4 years prices will approach the highs seen last in the year 2000.
CONCLUSION
Until the Fed sees the error of its ways, prudent money managers will reduce fixed income holdings past the two year note, and will continue money market arbitrage.
STRATEGY
Asset managers must re-introduce growing inflation into their models.
The board must be notified of the potential for increasing input and output prices, interest rates, and the stock market.
Senior managers must review lending policies and procedures to make sure to place a sufficient spread in all fixed income business, and ensure a match of asset and liability maturities.
Hedging programs must be examined for opportunities presented by occasional spikes in long term debt prices.
TACTICS
Extend the amount and maturity of liabilities.
Prepare bond offerings and use the CBOT in advance of bond sales if prices spike upwards.
Increase spreads on all loan transactions.
Be aware of Treasury refundings and take advantage of price changes.
Begin active hedging on a small scale, selling into overbought US Bond futures.
As the chart below shows, stocks are still in a bull market, begun back in early 2003, and will continue higher until the Fed signals the end of monetary expansion by raising short-term rates again.
INFLATION AND THE STOCK MARKET
If inflation is coming, as we forecast in a previous weblog entry, stocks will outperform bonds by a substantial margin - perhaps as much as 10% - until the Fed realizes how badly it's blundered and starts raising the Fed Funds target again.
As inflationary pressures push into the economy, businesses will use this opportunity to raise prices on all goods and services, fattening income, earnings, and dividends.
INFLATION AND THE VALUE OF THE DOLLAR
Inflation is also lowering the value of the dollar against most trading-partner currencies, making imports more expensive, and raising domestic US prices.
The lower-valued dollar will also make exports cheaper, boosting the sales and stock prices of major US exporters.
ASSET ALLOCATION
For all these reasons Paterson Financial has moved a portion of the portfolio out of two year notes and into the NYSE composite.
The fraction of assets held in fixed income securities should be reduced to no more than 30% of assets and aggressive managers might go as low as 10% in fixed income securities.
Very aggressive money managers will consider dividend-free equities as typified by the NASDAQ 100.
Notice the index has more than doubled since the lows of 2002 and will lead the way as stocks trade higher.
If the index doubles again in the next 4 years prices will approach the highs seen last in the year 2000.
CONCLUSION
Until the Fed sees the error of its ways, prudent money managers will reduce fixed income holdings past the two year note, and will continue money market arbitrage.
STRATEGY
Asset managers must re-introduce growing inflation into their models.
The board must be notified of the potential for increasing input and output prices, interest rates, and the stock market.
Senior managers must review lending policies and procedures to make sure to place a sufficient spread in all fixed income business, and ensure a match of asset and liability maturities.
Hedging programs must be examined for opportunities presented by occasional spikes in long term debt prices.
TACTICS
Extend the amount and maturity of liabilities.
Prepare bond offerings and use the CBOT in advance of bond sales if prices spike upwards.
Increase spreads on all loan transactions.
Be aware of Treasury refundings and take advantage of price changes.
Begin active hedging on a small scale, selling into overbought US Bond futures.
Friday, September 28, 2007
Fed Makes Another Mistake
If there is any doubt the Fed is completely incompetent, their recent action to lower the Funds target to 4.75 will dispel the confusion.
The bond market fell, the gold market rose to new highs, and currencies rose. These markets quickly gave their opinion of the Fed's actions: this is an inflationary bungle of monumental proportions.
These markets are now stabilizing, and waiting for the next phase in their move to confirm the error of the Fed's actions.
With money (MZM) growing at better than 10% per year, mostly fueled by loan growth, this action will only encourage lending by banks, leading to further money supply growth, more inflation, and higher long term interest rates.
Prudent money managers are now extending the maturity of their liabilities, locking in long term financing at these levels.
BONDS
Let's look at the weekly chart for 30 Yr. US Bond Futures.
Notice the recent price action. After testing the old highs for the contract, the market began to fall in preparation for the Fed meeting.
Once the Fed made the decision to lower rates, the decline accelerated, and only this week has stabilized, four points lower.
It looks like there will be a steady decline back down to the 104 level, where we'll find temporary support.
GOLD
The gold market also moved well in advance of the Fed's actions.
Notice prices were at the $715 per ounce level before Fed action, and immediately punched through resistence, making new highs near $750 per ounce.
Record highs are not too far above us, now, and this market will certainly test those levels.
FED FUNDS
The last time gold prices were at these levels, the Fed was still raising short term interest rates, trying to slow money growth.
Note the date on which gold prices peaked and compare it to the date on which the Fed stopped raising rates.
Gold prices peaked in May of 2006 and the Fed stopped raising rates a few months later.
This action says to most participants that inflation - in the form of gold prices - is a primary concern of the Fed.
Will the recent spike in gold prices cause the Fed to reverse itself again and start raising short term rates again?
If so, what will this do to the US economy?
This is the nightmare scenario that's talked about in financial strategy sessions throughout the world.
TACTICS
Extend the maturity of liabilities to five years. Lock in rates at these levels, because inflation will raise long term interest rates.
Make no new long term loans for at least 6 months.
Retain all loan servicing.
Continue money market arbitrage.
STRATEGY
Senior managers must be warned of the potential for future inflation and increases in long term rates.
Senior managers must warn the Board of Directors of the potential dangers of continued money growth.
The Asset/Liability committee must review its plans for an extended period of instability in the long term credit markets.
Hedging programs must be prepared to allow the institution to take advantage of temporary spikes in bond prices and sell futures in anticipation of bond issuance.
Spreads must be widened on all loan transactions. Add fifty basis points today, and consider adding another fifty as bonds trade lower.
The bond market fell, the gold market rose to new highs, and currencies rose. These markets quickly gave their opinion of the Fed's actions: this is an inflationary bungle of monumental proportions.
These markets are now stabilizing, and waiting for the next phase in their move to confirm the error of the Fed's actions.
With money (MZM) growing at better than 10% per year, mostly fueled by loan growth, this action will only encourage lending by banks, leading to further money supply growth, more inflation, and higher long term interest rates.
Prudent money managers are now extending the maturity of their liabilities, locking in long term financing at these levels.
BONDS
Let's look at the weekly chart for 30 Yr. US Bond Futures.
Notice the recent price action. After testing the old highs for the contract, the market began to fall in preparation for the Fed meeting.
Once the Fed made the decision to lower rates, the decline accelerated, and only this week has stabilized, four points lower.
It looks like there will be a steady decline back down to the 104 level, where we'll find temporary support.
GOLD
The gold market also moved well in advance of the Fed's actions.
Notice prices were at the $715 per ounce level before Fed action, and immediately punched through resistence, making new highs near $750 per ounce.
Record highs are not too far above us, now, and this market will certainly test those levels.
FED FUNDS
The last time gold prices were at these levels, the Fed was still raising short term interest rates, trying to slow money growth.
Note the date on which gold prices peaked and compare it to the date on which the Fed stopped raising rates.
Gold prices peaked in May of 2006 and the Fed stopped raising rates a few months later.
This action says to most participants that inflation - in the form of gold prices - is a primary concern of the Fed.
Will the recent spike in gold prices cause the Fed to reverse itself again and start raising short term rates again?
If so, what will this do to the US economy?
This is the nightmare scenario that's talked about in financial strategy sessions throughout the world.
TACTICS
Extend the maturity of liabilities to five years. Lock in rates at these levels, because inflation will raise long term interest rates.
Make no new long term loans for at least 6 months.
Retain all loan servicing.
Continue money market arbitrage.
STRATEGY
Senior managers must be warned of the potential for future inflation and increases in long term rates.
Senior managers must warn the Board of Directors of the potential dangers of continued money growth.
The Asset/Liability committee must review its plans for an extended period of instability in the long term credit markets.
Hedging programs must be prepared to allow the institution to take advantage of temporary spikes in bond prices and sell futures in anticipation of bond issuance.
Spreads must be widened on all loan transactions. Add fifty basis points today, and consider adding another fifty as bonds trade lower.
Saturday, July 21, 2007
Correction
What I meant to say was bond YIELDS declining.
In the previous post, I stated the opposite.
In the previous post, I stated the opposite.
Friday, June 15, 2007
I'll Be Damned - Gold Loses its Luster
Pondering the latest market news - described below - I finallly came to the conclusion that the gold market is out of synchronization with the rest of the financial markets.
The only explanation that makes sense is massive selling of gold.
In the decades since Paul Volcker destroyed and bankrupted the Hunt Brothers when they attempted to corner the silver market back in the 70s and 80s, the world has changed.
No one thinks inflation is coming back, and that's what the gold market is telling us.
Inflation is deader today than ever before in human history.
No longer will a flood of bullion lead to inflation as its done for thousands of years.
Now that money is a pure fiat with government control, and now that money growth is published weekly, the monetary authorities will never again fool the markets about inflation.
So, what we're observing is the sale of gold.
That's it.
As soon as the markets realize this, we're off to the races again, with bond prices declining, and stock prices rising.
The only question is whether the Fed will now lower short-term rates.
STRATEGY
Be very careful here, and be prepared for the Fed to lower rates.
The only explanation that makes sense is massive selling of gold.
In the decades since Paul Volcker destroyed and bankrupted the Hunt Brothers when they attempted to corner the silver market back in the 70s and 80s, the world has changed.
No one thinks inflation is coming back, and that's what the gold market is telling us.
Inflation is deader today than ever before in human history.
No longer will a flood of bullion lead to inflation as its done for thousands of years.
Now that money is a pure fiat with government control, and now that money growth is published weekly, the monetary authorities will never again fool the markets about inflation.
So, what we're observing is the sale of gold.
That's it.
As soon as the markets realize this, we're off to the races again, with bond prices declining, and stock prices rising.
The only question is whether the Fed will now lower short-term rates.
STRATEGY
Be very careful here, and be prepared for the Fed to lower rates.
Saturday, June 09, 2007
Bond and Gold Prices Plummet
This is a puzzle.
Money is growing more rapidly with each passing week as banks expand lending.
This should send bond prices lower - they are.
Stock prices should fall - they did.
But, gold prices should soar - they didn't.
What is going on?
Here are the relevant charts.
MONEY SUPPLY
BOND FUTURES
GOLD FUTURES
WHAT WILL THE FED DO?
The markets are confused, and not telling a consistent story.
Unless the Fed is about to raise short term rates. That's the only answer that makes sense.
Stay tuned.
TACTICS
Prudence is still the watchword. Reduce the size of the book, put all new money in the short end of the curve, and expand money market arbitrage.
Long term assets must have a profitable spread, or don't do it.
STRATEGY
Tell the Board and Senior Management we're in for a long, difficult period.
Reduce expectations, and build capital.
Money is growing more rapidly with each passing week as banks expand lending.
This should send bond prices lower - they are.
Stock prices should fall - they did.
But, gold prices should soar - they didn't.
What is going on?
Here are the relevant charts.
MONEY SUPPLY
BOND FUTURES
GOLD FUTURES
WHAT WILL THE FED DO?
The markets are confused, and not telling a consistent story.
Unless the Fed is about to raise short term rates. That's the only answer that makes sense.
Stay tuned.
TACTICS
Prudence is still the watchword. Reduce the size of the book, put all new money in the short end of the curve, and expand money market arbitrage.
Long term assets must have a profitable spread, or don't do it.
STRATEGY
Tell the Board and Senior Management we're in for a long, difficult period.
Reduce expectations, and build capital.
Saturday, June 02, 2007
Bonds Break Support
As the chart below shows, sellers are dominating the bond market right now.
Gold is still in a trading range.
Money is still growing.
Bonds have broken support and must be sold.
TACTICS
Continue to shrink the book, and put all new business into Money Market Arbitrage.
When making long term loans, make sure of both spread and credit quality.
Don't expect the Fed to lower short-term rates any time soon.
We expected the Fed to consider easing sometime this Summer, but with bond prices falling, there is little chance the Fed will lower the funds target.
STRATEGY
Warn the Board. Something is driving long rates up.
Gold is still in a trading range.
Money is still growing.
Bonds have broken support and must be sold.
TACTICS
Continue to shrink the book, and put all new business into Money Market Arbitrage.
When making long term loans, make sure of both spread and credit quality.
Don't expect the Fed to lower short-term rates any time soon.
We expected the Fed to consider easing sometime this Summer, but with bond prices falling, there is little chance the Fed will lower the funds target.
STRATEGY
Warn the Board. Something is driving long rates up.
Wednesday, May 23, 2007
Stock markets making new highs
In the month since the end of the correction, all major stock market indexes have surged to new highs.
The bull market is intact and will move higher in the months and years to come.
Get long and get rich.
STOCK PRICE INDEXES
First, the New York Stock Exchange Composite
Second, the S&P 500
Finally, the Nasdaq 100
GOLD
Gold prices are a puzzle. I would expect them to be surging with bonds falling.
BONDS
Bonds are at major support. The gold charts suggest this is the time to buy bonds.
The bull market is intact and will move higher in the months and years to come.
Get long and get rich.
STOCK PRICE INDEXES
First, the New York Stock Exchange Composite
Second, the S&P 500
Finally, the Nasdaq 100
GOLD
Gold prices are a puzzle. I would expect them to be surging with bonds falling.
BONDS
Bonds are at major support. The gold charts suggest this is the time to buy bonds.
Friday, April 27, 2007
Bank Lending Surges
The basic money number, MZM, continues to surge, growing faster each month.
The Fed is not the problem, for a change. As this chart shows, the monetary base is not growing, so it must be bank lending.
At some point, the economy will slow, and so will lending, but for now, the Fed cannot lower rates or willl risk reigniting inflation.
GOLD PRICES
Gold prices are finding resistence at $700 an ounce - the highs of July 2007 - and should punch through with these latest money numbers. It's time for caution.
The old highs of $780 an ounce are easily within reach.
If gold surges to new highs, the Fed will be tempted to raise - not lower - short term rates. They will have no choice.
BOND PIRCES
Bond prices bounced these past weeks, but are in a longer term decline, signaling inflation worries.
This is just another indicator of the problems the Fed is facing. Raising short term rates must be in the mind of every inflation fighter on the Board of Governors.
The Fed is not the problem, for a change. As this chart shows, the monetary base is not growing, so it must be bank lending.
At some point, the economy will slow, and so will lending, but for now, the Fed cannot lower rates or willl risk reigniting inflation.
GOLD PRICES
Gold prices are finding resistence at $700 an ounce - the highs of July 2007 - and should punch through with these latest money numbers. It's time for caution.
The old highs of $780 an ounce are easily within reach.
If gold surges to new highs, the Fed will be tempted to raise - not lower - short term rates. They will have no choice.
BOND PIRCES
Bond prices bounced these past weeks, but are in a longer term decline, signaling inflation worries.
This is just another indicator of the problems the Fed is facing. Raising short term rates must be in the mind of every inflation fighter on the Board of Governors.
Friday, April 13, 2007
Correction is Over
As the chart of the NYSE Composite shows, the correction is over.
Prices make a double bottom
Trade up through resistance
Fed warns against inflation
Fed won't lower short rates any time soon
Stock prices retreat for one day
Prices make new highs for the move.
This correction is over.
Time to get back in the market and put that new money to work.
Prices make a double bottom
Trade up through resistance
Fed warns against inflation
Fed won't lower short rates any time soon
Stock prices retreat for one day
Prices make new highs for the move.
This correction is over.
Time to get back in the market and put that new money to work.
Sunday, April 08, 2007
Money Growth Continues
As the chart below shows, money growth continues, so don't expect any relief from high short term rates any time soon.
Gold prices are not falling and bond prices are. Be careful.
The stock market is sitting at resistance, waiting for this correction to resolve. Right now, it looks like the damage has been done, and the correction is over. We will know in a few weeks.
TACTICS
Stay away from long term assets unless they are perfectly matched. Continue money market arbitrage.
STRATECY
Steady as she goes.
Gold prices are not falling and bond prices are. Be careful.
The stock market is sitting at resistance, waiting for this correction to resolve. Right now, it looks like the damage has been done, and the correction is over. We will know in a few weeks.
TACTICS
Stay away from long term assets unless they are perfectly matched. Continue money market arbitrage.
STRATECY
Steady as she goes.
Saturday, March 31, 2007
Money Growth Puts the Fed in a Box
As the chart below shows. MZM continues to grow, punching through the 6% level for year on year growth.
The Fed would like to address the looming slowdown by cutting Fed Funds, but can't.
Gold prices are rising, and bond prices falling, both potential signs of growing inflation.
STOCK MARKET WARNING
The danger here is for investors to shun the stock market.
First, new money will go into short-term debt instruments, not stocks.
Second, speculative long positions will be closed out.
Third, if prices drop below the big volume days around Feb 27th this will be a major sign of weakness and new short postitions will be established.
TACTICS
No new long term assets unless matched by liabilities with a good spread.
Expand money market arbitrage.
Lengthen liabilities on major weakness.
STRATEGY
Warn senior management and the Board of the potential for continued high short-term interest rates.
Consider buying puts or establishing short postitions in the futures market.
The Fed would like to address the looming slowdown by cutting Fed Funds, but can't.
Gold prices are rising, and bond prices falling, both potential signs of growing inflation.
STOCK MARKET WARNING
The danger here is for investors to shun the stock market.
First, new money will go into short-term debt instruments, not stocks.
Second, speculative long positions will be closed out.
Third, if prices drop below the big volume days around Feb 27th this will be a major sign of weakness and new short postitions will be established.
TACTICS
No new long term assets unless matched by liabilities with a good spread.
Expand money market arbitrage.
Lengthen liabilities on major weakness.
STRATEGY
Warn senior management and the Board of the potential for continued high short-term interest rates.
Consider buying puts or establishing short postitions in the futures market.
Saturday, March 17, 2007
Stocks in Dangerous Ground
As the weekly chart below shows, the current correction is stalled, waiting for new positions from investors.
First, notice the big volume day of February. Since then, prices have made new lows each week, but have closed strongly. This is a neutral sign.
Second, notice prices have retreated both of the last two weeks after reaching the same price level. This means sellers are waiting at that level.
Finally, the downward revisions to GDP are telling investors to beware, a slowdown might be coming. The Fed program to slow bank lending might be working.
In the face of a potential slowdown in the US economy, the Fed would like to cut short term rates.
GOLD
Gold prices are signaling potential inflation.
This is the market the Fed watches. Recall the peak in gold prices coincided with the end of the rise in Fed Funds. At the same time, the current rally in bond prices began.
Notice prices have not made new lows since the low of $560 in 2006.
With potential inflation looming, the Fed cannot cut short term rates.
MONEY
The Fed has been raising short term rates since the middle of 2002 and money growth slowed dramatically at first, from 20% to a low growth rate near zero in 2005.
Here's the problem: since the trough in growth rates in 2005, money began to grow again, and continues to grow at faster rates - 6% in the latest data.
This has to be troublesome for the Fed.
With money growth this strong, the Fed cannot cut short term rates.
TACTICS
Stay out of the stock and bond markets.
Stick with money market arbitrage. It's safe and profitable.
Lengthen liability maturities as rates allow.
Continue to shorten asset maturities. Place all new cash in Fed Funds and other short term instruments.
STRATEGY
Tell the board things are under control.
The spread continues to widen, making the bank more profitable.
The portfolio is nearly balanced, assets are over-weighted in the short end of the curve, and no hedging is required.
First, notice the big volume day of February. Since then, prices have made new lows each week, but have closed strongly. This is a neutral sign.
Second, notice prices have retreated both of the last two weeks after reaching the same price level. This means sellers are waiting at that level.
Finally, the downward revisions to GDP are telling investors to beware, a slowdown might be coming. The Fed program to slow bank lending might be working.
In the face of a potential slowdown in the US economy, the Fed would like to cut short term rates.
GOLD
Gold prices are signaling potential inflation.
This is the market the Fed watches. Recall the peak in gold prices coincided with the end of the rise in Fed Funds. At the same time, the current rally in bond prices began.
Notice prices have not made new lows since the low of $560 in 2006.
With potential inflation looming, the Fed cannot cut short term rates.
MONEY
The Fed has been raising short term rates since the middle of 2002 and money growth slowed dramatically at first, from 20% to a low growth rate near zero in 2005.
Here's the problem: since the trough in growth rates in 2005, money began to grow again, and continues to grow at faster rates - 6% in the latest data.
This has to be troublesome for the Fed.
With money growth this strong, the Fed cannot cut short term rates.
TACTICS
Stay out of the stock and bond markets.
Stick with money market arbitrage. It's safe and profitable.
Lengthen liability maturities as rates allow.
Continue to shorten asset maturities. Place all new cash in Fed Funds and other short term instruments.
STRATEGY
Tell the board things are under control.
The spread continues to widen, making the bank more profitable.
The portfolio is nearly balanced, assets are over-weighted in the short end of the curve, and no hedging is required.
Tuesday, March 13, 2007
Stock Market Headed Lower?
The rest of this week will tell investors what's happening, and it doesn't look good.
As the chart below shows, the danger now is a significant move down.
Prices have risen 4 out of the last five days, and could not get above the big volume day of February 27th.
Prices are now headed lower and technical traders will sell this market as prices drop below the lows of the 27th.
As the chart below shows, the danger now is a significant move down.
Prices have risen 4 out of the last five days, and could not get above the big volume day of February 27th.
Prices are now headed lower and technical traders will sell this market as prices drop below the lows of the 27th.
Tuesday, March 06, 2007
Storm Strengthens
VOLUME yesterday was not enough to say this decline is over.
BEWARE the continuing fall in stock prices.
DO NOT add new money to the stock market.
STAND BY for continuing updates.
BEWARE the continuing fall in stock prices.
DO NOT add new money to the stock market.
STAND BY for continuing updates.
Monday, March 05, 2007
STOCK MARKET WARNING - HURRICANE
Stocks made new lows, and closed at the low.
If volume was light, this could mean a prolonged correction.
The Fed has a habit of doing this.
KEEP YOUR POWDER DRY.
Fed funds will yield a riskless 5.25%. Take it
With today's price action, the technical traders will be licking their lips and fighting for a place in the pit to see this market and sell it if it goes south.
If we continue down for many more days, we will be below the large volume days of the last week in February, and that will become resistance.
The Techs will attack the NYA every time it pokes into resistance.
That will make it harder to bounce back.
Summary
We are still in a bull market, don't worry, but this could get ugly.
If volume was light, this could mean a prolonged correction.
The Fed has a habit of doing this.
KEEP YOUR POWDER DRY.
Fed funds will yield a riskless 5.25%. Take it
With today's price action, the technical traders will be licking their lips and fighting for a place in the pit to see this market and sell it if it goes south.
If we continue down for many more days, we will be below the large volume days of the last week in February, and that will become resistance.
The Techs will attack the NYA every time it pokes into resistance.
That will make it harder to bounce back.
Summary
We are still in a bull market, don't worry, but this could get ugly.
Friday, March 02, 2007
Gold Falls to $646
Late Friday, March 2nd, gold broke support, closing at $646.
This is good news for everyone.
This is good news for everyone.
Be Careful Here
VOLATILITY!
In the past two weeks we've seen volatility in gold, bonds, and stocks.
Something is going on be very careful.
This post was written before market close on Friday.
GOLD
NOTICE - Volatility started Wednesday the 21st of February and has continued, with prices falling a week later on the 28th, and then breaking support and making new lows on Friday the 2nd of March.
BONDS
NOTICE - Bonds began their recent climb at the end of January, and spiked on Tuesay the 27th of February.
STOCKS
NOTICE - Stocks broke on Tuesday the 27th while bonds were spiking.
In the past two weeks we've seen volatility in gold, bonds, and stocks.
Something is going on be very careful.
This post was written before market close on Friday.
GOLD
NOTICE - Volatility started Wednesday the 21st of February and has continued, with prices falling a week later on the 28th, and then breaking support and making new lows on Friday the 2nd of March.
BONDS
NOTICE - Bonds began their recent climb at the end of January, and spiked on Tuesay the 27th of February.
STOCKS
NOTICE - Stocks broke on Tuesday the 27th while bonds were spiking.
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