Posted on 11/12/2009 7:51:28 AM PST by SeekAndFind
With the bond markets closed, all the attention today was on commodities and equities.
Crude oil ended up 0.3% at $79.28 a barrel and gold futures hit a new record of $1119 an ounce today, nearly breaking the $1120 mark before dropping down to $1115.
The three major indexes all ended higher. The Dow, which has been up every single day this month, ended at 10,293, up 47 points, the NASDAQ at 2166, up 16 points, and the S&P 500 clocked in at 1098, up 6 points.
Energy and utilities took a lot of losses today, with Time Warner Cable (TWC) down 2.6% to $41.63. Hess Corp. (HES) dropped 1.7% to $57.45 while AES (AES) dropped to $13.61 to close down 1.5%.
Plenty of gainers today, though, especially in finance . Take your pick of Bank of America (BAC) which closed up 2.7% at $16.43, Goldman Sachs (GS), up 2.3% at 180.50, or MBIA Inc. (MBI), which after huge losses the other day, surged back with 9% gains to finish the day at $3.81.Emerson Radio (MSN) also had a great day, gaining 41% to close at $2.02 thanks to improved quarterly earnings.
(Excerpt) Read more at businessinsider.com ...
One line is the S&P500. The other is the US dollar. They are almost perfectly inversely related. This is not an investor-driven rally; it is an institutionally-driven rally fed by zero-interest money underwriting an international currency play and supporting computerized trading of the same shares of the same few stocks over and over and over. It will not end well.
10,700 (OK, 10500) and I’m done.
Good post.
Prediction: the moment the dollar shows strength for a reasonable amount of time, this leveraged dollar-carry market will crash back to the March lows.
Is the market going up or is the dollar going down?
The longer this goes on, the worse the reversal will be. My fear is that the dollar is going to reach a critical valuation where the Fed can no longer effectively issue new debt or control interest rates, and I suspect that time is coming very soon.
“Prediction: the moment the dollar shows strength for a reasonable amount of time, this leveraged dollar-carry market will crash back to the March lows.”
The moment interest rates go up, the carry trade is destroyed
and the market will crash.
I just attended a company meeting in which we were told that we were profitable for this quarter, mostly because of cost reductions due to layoffs. Likely this is typical throughout the private sector.
This in combination with commodity price increases is nothing to crow about. Such metrics do not indicate a growing economy; quite the opposite.
The real unemployment rate [currently above 17% when factoring in part-timers and those who have given up looking] is the real indicator of economic growth.
The Obama administration continues to preach that the cause of all of our problems is that the gov’t is not big enough, we keep too much of our own earnings and that there is too much economic freedom.
He and his minions are certainly doing everything they can to address those issues. The prescription will be more of the poison that got us here in the first place. The results will be all too predictable.
The only hope is the American people themselves putting a stop to this. Once we get to the point wherein we are turning out in the streets burning cars when the growth of a welfare program is being slowed, we will officially have been Europeanized.
The dollar is going down as the market goes up. It is due to an intentional market strategy called a “currency carry”. Banks are borrowing dollars to buy foreign-denominated debt (which actually pays some interest) and then engaging in highly-leveraged trading on the drop on relative valuation during the investment term of the bonds they hold. The danger is in what happens when the Fed can no longer control short-term interest rates. If they start rapidly going up, the game is over and the effect will be, well... kinda bad.
Well said.
Now of course we need to get a feel for when the Government ‘must’ increase interest rates. I know the Dems don’t plan to increase rates until the 2010 elections are past - if then - but what would force them to raise rates?
The Treasury already seems to be buying a large fraction of US debt, which is as obvious a Ponzi scheme as I have ever seen. I guess for reality to re-enter the market we need foreigners to stop buying our debt.
I predict Dow down over 300 by COB, today.
I could be wrong...
That is the 64 trillion dollar question. When are the rates
going to go up...rather forced up? My bet is as long as they
can. The feds used to follow the street, no longer, they’re
intertwined now and any correlation to past policies is no
longer valid. GS and the Fed will try to hold rates down
at least until after 2010 elections, my guess.
I attended a conference on Tuesday. The economist that spoke said to watch out with the stock market because there is no reason it should be as high as it is. We are in store for a correction. Also, we’re at the bottom of economy, but very slow growth, another dip in 2011 (but not as bad as this one).
We are in a cotton candy economy. Tastes sweet, looks substantial, lots of fluff, no reality. Bet on the S&P down
50% the moment rates start to climb.
Wow! If this keeps up, we'll be back to where we were just 2 years ago in a couple of years!
You’ve lost me. I understand unemployment to be a lagging indictor which says nothing about economic growth until long after it occurs. I would never look to the raw unemployment number to tell me if the recession has ended and if economic growth is beginning to occur.
I have been out of the stock market since Dec 2006 and am looking for an entry point, so I am interested in knowing when true economic growth will resume. I look to leading indicators like durable goods orders, transportation, new home building and months of home inventory. I even look at the duration of unemployment which is a leading indicator.
The raw unemployment numbers tell me nothing. Why do you think the unemployment rate is the “real indicator of economic growth”. I see it as nothing but a historical marker. The economy had severe problems long and the liquidty crisis was well under way before unemployment rose and long before it soared.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.