skip to main |
skip to sidebar
Big gains on thin volumes. Stocks are held by weak hands.
It could go higher, but I do not believe this is an investable market.
Musical chairs for the nimbly positioned is more like it perhaps.
Hard to tell where things will go when the Banks are pumping up.
The markets were firmly in the United States of Amnesia today, sloughing off all the bad news in Japan, the Middle East, and with sovereign defaults. But there was an 'edge' to the trade, with the wise guys keeping one hand on their wallet and a clear path to the door.
A weak chart yes, but a burial would likely be premature.
Currencies notoriously overshoot. A clean break of 71 and we'd be out of Kansas, Toto, and into some brave new world.
Still, if the buck wishes to gather itself together, it might well do so soon. Or better yet, the yen and euro must weaken, because the DX index is a primarily a mirror of their own relative positions.
Updates to this report are available here.
"Updated on March 21, 2011 21:20 (JST)(Japan Standard Time) nGy/h (nano- Grays per hour)Realtime radiation data collected via the System for Prediction of Environment Emergency Dose Information(SPEEDI) These Results are the maximum values of the space those rate distributions shown from local governments in the latest updated date and time.
Not surprisingly, Miyagi , Fukushima and Ishikawa are completely N/A, as every single reading is Under Survey, may be unavailable sensors because of Tsunami (or maybe censored?)."
Background radiation comes from many sources, including medical x-rays, radon and cosmic rays as the usual suspects. Radon is a decay product of the uranium series, and decays by emitting an alpha particle. The direct parent of Radon is Radium, which emits gamma and alpha particles. Radon gas has different levels of concentration in buildings and can vary considerably.
In the cases from around the world, in normal areas, the dose rates were less than 100 nano Grays per hour (0.01 milli rem).
Those in Japan who can take reliable radiation readings and report them to a central independent source can do so here.
They are struggling to take the equity markets higher, but the short term downtrend is still intact.
There was an air of disassociation with reality in the markets today in honor of options expiration.
The Fed announced the results of their stress tests, and began to allow the banks to increase their dividends and buy back their stocks. This is a windfall for wealthy shareholders and corporate insiders, supplied by the Fed using what are essentially public funds, as subsidies to the monied interests.
But it does not help to revitalize the real economy, even while it continue to debase the currency. This is the root cause of a future inflationary episode that will rock the status quo to its foundations.
Gold and silver rallied back with the G7 intervention in the currency markets on behalf of the Japanese yen.
I think the rationale that this was in support of Japanese exporters is more rationale than fact. The exporters' biggest problem is that their supply chains and manufacturing are disrupted.
Rather, the intervention at this time was most likely in response to what the central bankers euphemistically call 'disorderly markets.' The intervention and its timing had everything to do with the yen carry trade, and the pressures that the extraordinarily strong yen was placing on global financial institutions, especially in their hedges and spreads. There was also some concern that the dollar was falling too far, too fast.
I am rethinking my estimates of a hyperinflation. There is also and increase in the forecast of inflation that will accompany the stagflation to which I am more positively inclined in the intermediate to long term forecast.
I consider a real deflation very unlikely, only as a policy decision. The risk as I see it is an inept slide into a deeper inflation than the central bankers intend.
As such I am now even more inclined to protect my own assets in hard currency and precious metals.
Now that we have a few more data points I adjusted the green 'parabola' which marks what is essentially an inverse head and shoulders formation developing in the gold market. We will look to see if the formation holds and is confirmed by gold breaking out above the neckline which is around the 1450ish area.
Silver is resilient, but as those of you who hold positions, particularly in the miners, the intra-day volatility can be fairly breath-taking.
The G7 will be meeting this evening on a teleconference to discuss the markets and the impact of the Japanese and Middle East situations on them. I expect interventions to be readied, but not necessarily unleashed tomorrow unless things are much worse than we realize.
Options expiration will become more of an issue later this month. For now the focus is on the delivery of March silver at the Comex, and the anticipation building in the April contract.
The G7 is meeting tonight to discuss potential market operations in the event that the situation in Japan and the Middle East worsen and the financial system begins to falter.
The strong yen does not create all that much of a problem yet for Japan, and it does have the benefit of easing their needs to purchase imported energy and supplies. The bigger problem might be for global financial institutions who are not properly hedged to the yen at these previously unthinkable highs.
I do think that more intervention in the markets in terms of buying support is likely, and the central bankers will play their usual games along with the primary banks' trading desks.
The situation in Japan with regard to the reactors is not yet resolved, and there are still follow on earthquakes which complicates the situation. There remains the possible for wider spread damage and loss of life.
Once that situation is resolved, the disruption to their infrastructure and supply chains will be their biggest challenges. Do not underestimate the severe damage that has been done to their electrical infrastructure generating capacity.
So, let's see what happens. The US indices stopped almost dead on their key support levels and tomorrow is options expiration. The capping in gold and silver has been almost continuous. It is interesting to see the pair trade of long bullion and short stocks working again. This tells us something of the nature of the market.
Stock futures are moving sharply lower after hours based on reports such as this: US Calls Radiation 'Extremely High' and Urges Deeper Caution.
The emphasis was clearly on the risk in Japan today. The Middle East situation continues to deteriorate.
The PPI and import prices are rising at a rate that suggests inflation, and continuing sluggish growth in GDP suggest stagflation is developing.
Stagflation, when not caused by an exogenous event such as occurred in the 1970s with the oil embargo, is the result of an obvious policy error in fiscal, public, and monetary decisions.
It takes an unusual set of circumstances to create stagflation. Before the 1970's economists used to say it was not possible.
Therefore it is a tribute to Obama's Wilsonian dithering, Bernanke's general spinelessness, and the Congress' rapacious venality that they will preside over stagflation's resurgence, without the scapegoat of an oil embargo to blame. They are presiding over the wholesale looting of a generation, and abetting the tranfer of that money and the future prosperity of the public to a wealthy few, their real constituency, in the manner of an oligarchy or crony capitalism.
"It was curious to think that the sky was the same for everybody, in Eurasia or Eastasia as well as here. And the people under the sky were also very much the same--everywhere, all over the world, hundreds or thousands of millions of people just like this, people ignorant of one another's existence, held apart by walls of hatred and lies, and yet almost exactly the same--people who had never learned to think but were storing up in their hearts and bellies and muscles the power that would one day overturn the world."
George Orwell
The EU Energy Chief made some comments about the likelihood of a major radiation disaster in Japan, which may be underway. This caused US equity markets to plunge dramatically.
Energy Commissioner Günther Oettinger said the situation is 'effectively out of control' ...
The markets are getting very mixed news on this, depending on the source. There are weighty papers from MIT saying the risks are minimal, and the US Ambassador in Tokyo issued reassuring words this morning.
Therefore traders are jittery because of the uncertainty regarding the quality of information being released from a variety of sources, and some thinking that there is understatement of the risk by the Japanese government and Tokyo Electric in order to avoid a panic. So the bias is to act first and fact check later.
This is what is called a "trader's market." Triple black diamond slopes IF you can handle them. Danger, une chute dans cette piste peut entrainer de graves lesions et meme la mort. Most people should stay off the slopes and enjoy their coffee in the lodge.
EU Official Warns of Possible Catastrophe In Japan
