World markets are being crushed as reality sets in. Japan’s out-of-the-blue decline in GDP is having spill-over effects everywhere. Lloyd’s bank decline (among many, many others) in London is having negative effects on banks world-wide.
Gold is screaming as traders search for a safe haven.
The growing feeling is that the bail out will not work. While Republicans have suddenly found their roots of smaller government and lower debt they don’t offer any ideas. They are in danger of being the party of no. The religious right discovered what happens when consistently negative attitudes dominate. Democrats have gone back to their roots, as well, spending as fast as they can.
The Treasury continues to flood markets with billions and billions of bonds in its weekly auctions. Everyone is waiting for the bond bubble to be punctured but it doesn’t happen. Yet.
Whilst I would prefer to be constructive with some clever long ideas this morning’s futures dampen enthusiasm. I will continue to pick my spots and dart in and out.
The market keeps searching for a bottom. But there doesn’t seem to be any catalyst for buyers. Buy and hold investors should take their money and find some CD’s. There will be rousing rallies and it will be painful to miss them. But not nearly as painful should you hold on to long positions. You can always get back in should we see a fit reason.
Last week I outlined my plan to go back to two to four positions and trade them. That has already begun.
My junk bond positions, while profitable, will be jettisoned. Bonds typically lead a recovery but the timing is too problematic now. I’ll keep my gold positions (GLD, GSS, FCXprM, GDX) for now and ride the wave.
I’ll be back with some, hopefully, more optimistic thoughts.
