“One day, we will have to stand before the God of history. And we will talk in terms of things we've done. And its seems to me that I can hear the God of history saying, 'That was not enough. For I was hungry, and you fed me not. I was naked, and you clothed me not. I was devoid of a decent sanitary house to live in, and you provided no shelter for me. And consequently, you cannot enter the kingdom of greatness.'" Martin Luther King
There is an obvious but still relatively select 'flight to safety' occurring as a forward looking group of investors flees the equity markets, seeking the safe havens of the precious metals, harder currencies, and government bonds. When and if a 'rush to safety' occurs the resulting impact might be terrific.
Where this will go I cannot say. But say what you will, that is what is happening now as reflected in the markets.
Most commentary that I have read about this flight to safety in the mainstream is naive, quite often spin, and too frequently bordering on slogans, ideology, and the idiotic.
The market was walked up by the futures and the HFT bots on light volumes for a rally that largely fell apart into the close. A stiff breeze will knock this market over, but it might very well take a rather stiff one, because there is little selling, and it seems light human participation in the markets at the moment. The only volume that appears is on the downdrafts. That is a recipe for disaster.
The Conference Board confidence measure today was very low as I had expected given the Michigan result, and the markets shook it off.
Most of the economic news this week will be a prelude to Friday's Non-Farm Payrolls report. The Fed Minutes were illuminating.
I think we need to be prepared for a higher than normal chance of a 'significant dislocation' in the financial system between now and the end of the year. That is still less than even probability however. If the government continues to gridlock on divergent extremes then the probability becomes higher.
What actual shape this 'break' might take I do not know, and will not care to speculate in detail. I am judging by the obvious strains in the real economy and the markets.
"It's not a monster movie. It's a supernatural thriller."
Ed Wood
Stocks need to climb out of a hole, and in order to do this they need to get the allocations from Treasuries. Watch Treasuries and VIX to see how 'real' these light volume rallies in stocks are.
Gold and Silver are rolling with the volatility.
Keep an eye on all the 50 and 200 DMAs and see which one is on top, and where they are going.
Let us pray for those whose hearts are hardened against His grace and loving kindness by greed, fear, and pride, and the seductive illusion and crushing isolation of evil.
We pray that we all may experience the three great gifts of our Lord's suffering and triumph: repentance, forgiveness, and thankfulness. And in so doing, may we obtain abundant life, and with it the peace that surpasses all understanding.
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