Unholy Alliance

Monday, stocks in Asia continued their strength from the previous week powering 1.2% higher. The trend proceeded in a less enthusiastic way in Europe netting a gain of 0.5%. In the U.S. though, things fizzled out as stocks declined slightly on low volume. Precious metals and their miners lost about 2% as BitCoin was all the rage, having more than doubled in just one week. Stocks in Asia went nowhere Tuesday. In Europe, stocks fell 0.7% and in the U.S. they edged down 0.3% on low volume.

Wednesday, stocks fell in Asia 0.5% but closed nearly flat for the day in Europe. In the U.S., the FOMC minutes took a bit of steam out of an early rally — giving the impression that perhaps the QE bond-buying frenzy may be slowing soon. Stocks closed down 0.4% on low volume as the 10-Year U.S. Treasury Bond yield shot up 3% to close at nearly 2.80%. In like fashion, “risky” assets like precious metals and their miners were hammered 3%. Notably silver dropped below $20 per ounce and gold below $1250 per ounce. These levels represent good value and a point to consider accumulating more. Of course, precious metals and their miners can drop to a discount well below their value which would represent and even greater buying opportunity.

Thursday, stocks in Asia fell 0.7%, but in Europe they were flat. In the U.S., stocks rose rose 0.7% on low volume. They were bolstered by the Senate Banking Committee vote to send Janet Yellen’s nomination as Federal Reserve chair to the full Senate for confirmation. That same day, the Senate voted to change the rules that were in place since 1789 to prevent filibuster of presidential appointment.   This all but assures an easy glide home for “QEeen” Yellen. Stocks  While they tried to disguise it with rhetoric about “judicial” appointments, this action demonstrated the extent to which the power brokers in Washington are in bed with the banking cartel. This unholy alliance could not tolerate Rand Paul’s threat of a filibuster of Yellen’s succession to the throne.  The Dow Jones Industrial Average closed above 16,000 with the S&P 500 Index and NASDAQ knocking at the door of closing at new round-number highs.

Friday, stocks in Asia drifted 0.3% lower while those in Europe changed little. In the U.S., stocks rose 0.4% on very low volume. Still, that was enough to push the S&P 500 Index over the 1800 threshold for the first time. If only Louis Rukeyser were here to share the joy — complete with champagne, party hats, balloons, noise-makers, and confetti! Here’s an excellent article that puts the present stock market mania in perspective. For the week, stocks did little, but precious metals and their miners were hammered about 5% lower. Finally, for all of you eternal bulls out there, you may wish to consider that sentiment is a bit euphoric and ponder what happens when that last greater fool goes all in.

 

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