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"As mentioned in previous quarterlies, the main long-term risk is that after two massive bubbles and two equally massive resurrection programs, the Fed may be out of ammunition.
Should more building blocks fall and a serious global double-dip develop, then the pattern of market behavior this time may be more historically typical. That is, instead of quickly recovering, markets will become cheap and stay below long-term averages for several years as was the case pre-Greenspan."
Jeremy Grantham
A big technical relief rally in stocks despite some very poor economic news, earthquakes and an approaching hurricane, lol.
The market was on support and deeply oversold. Yesterday was the 'stutter step' at support that indicated they were going to try and take it back up today no matter what. And so they did.
All eyes on Jackson Hole. I doubt Benny will roll anything out of significance, but some jaw-boning is de rigeur.
There is no economic recovery for people, just corporate people.
Bear raid right on schedule for Comex option expiration week, after they ran it up to the stratosphere.
Look out for Thursday expiration and Friday when Benny will be expected to say something on the easing front.
A wild day in the markets today as stocks came in much higher and then tanked, with the CDS spreads on Bank of America running much higher along with gold and to a lesser extent silver.
Financials pressed the SP 500 lower all day, and Goldman broke hard to the downside into the close as a story on Reuters suggested that Lloyd Blankfein had hired a white collar criminal defense attorney named Reid Weingarten.
On Friday Bernanke will be speaking at Jackson Hole, and the markets are looking for some indication of the latest subsidy to the markets from the Fed. If not a flat out QE3, then perhaps Benny will speak about a program to control the longer end of the yield curve.
All this uncertainty had investor flocking into the safe haven of gold sending it to the 1890's. This has been a brutal rally for the metals bears.
This Thursday the 25th is the option expiration on the Comex. I have to admit that I am concerned that gold has been allowed to rise up into the oxygen depletion zone here, as had been done with silver not all that long ago, and that applications of bear raids and margin increases will bring it tumbling back down to support.
I wouldn't try and get in front of this comet, because we are not quite sure what is driving it. Chavez' margin call on the Bank of England's gold could be triggering this parabolic run. It would nice if gold consolidated its gains soon. I am playing the markets defensively for now.
Let's see what happens.
A very volatile day on Wall Street as stocks came in higher from the overnight trade, but then lost their early gains and dipped much lower led by the Bank of America which is rumoured to be in trouble.
Stocks recovered their losses to be almost unchanged, but a late breaking story from Reuters quoted a 'government source' that Goldman Sachs CEO Lloyd Blankfein has retained an attorney, Reid Weingartern, from the White Collar Criminal Defense group at Steptoe and Johnson. Goldman plunged more than 5 percent on the news.
The action may be related to a subpoena received from Justice regarding the Carl Levin report, and possible perjury charges. Lloyd Blankfein is a Harvard Law School graduate himself, and is reputed to have a very smart legal mind. He could be acting out of an excess of caution. It is hard to imagine the Obama Justice Department actually DOING anything to any of the pampered princes of Wall Street.
Once again the markets are near the pivots and key support levels. Most likely a big move is hidden somewhere in the cards.
