Gold was up 2+% along with a record low closing yield on the 10-year Treasury bond today as news out of Europe deteriorated. Yet, inflation-linked assets such as oil and copper were down in price. Thus we are seeing a rerun of periods in 2008 and 2011. In both those summers and into the fall, gold and high-quality bonds got marked up in price as credits once thought to be strong ones were unmasked as weaklings. The pattern of a simultaneous flight to hard money and to the credit of the national governments with the best credit in the world is consistent a perceived deterioration of business prospects.
The overvalued Facebook IPO today shows insiders distributing their cheaply-acquired stock to the ’99%’. LOL, haha, ROTFL. It is as much a sign of an Internet 2.0 bubble top as the Glencore IPO last year was for most commodities. But the top does not usually happen immediately. Some stocks top before others. The “real deal” assets such as gold do not really crash, though their market prices fluctuate.
We here at TDC mostly focus on the big picture. I think Jeff Harding and I have done a (much) better than average job in assessing macroeconomic and major market trends over the past few years since we began blogging around the time the financial hurricane hit in 2008. Shorter-term trading-related comments are really not appropriate for this site, and I will be providing them as I once did at my blog, econblogreview.blogspot.com. These may or may not be updated daily; you may want to RSS the site. More macro-related comments and thoughts will continue to be posted here.
Please do not think that QE3 will bail bad assets out. Prior Fed actions have not done so, and in any case, sometimes past is not quite prologue.
Asian stocks are down a good deal as of now, but unlike in 2008 and 2009, they have not been very predictive of what American markets will do the next day.
We are now even deeper in financial Extremistan. I am therefore cautious and looking for high-quality investment opportunities, having had a pretty good run the past three as well as the past thirty years in markets that generally made more sense than these.