Monday, stocks in Asia declined 0.3% and in Europe fell only slightly. However, U.S. stocks roared upward 0.9% in an unfounded wave of optimism on moderate volume. The VXO fear index plummeted nearly 6% to close at 16.46. The NASDAQ 100 again inched above the 3000 level as a result. The 10-Year U.S. Treasury Bond rate rose over 3% to close at 1.76. Gold remained below $1700 an ounce but just barely. Here’s a good article branding Fed monetary policy actions as “roach motel” or “Hotel California.”
In Asia Tuesday stocks rose 0.5% and 0.6% in Europe. Stocks in the U.S. tacked on a 1.1% gain on moderate volume exceeding the upper Bollinger band, while the VXO fear index dropped over 4% to below 16 and the 10-Year U.S. Treasury Bond rate rose over 3.6% to close at 1.83. As a sign of the euphoric market sentiment, Facebook rose 3.59% and banking stocks soared a similar amount. Precious metals dropped about 1.6%. This chart from ZeroHedge gives a good picture of the U.S. debt and deficit picture over time.
Stocks in Asia followed the lead from the U.S., rising 1% with the NiKKEI 225 Index blasting above the 10,000 mark. Stocks in Europe gained 0.4%. In the U.S., stocks gave back some of their unfounded gains, dropping 0.4% on low moderate volume. Precious metals declined nearly 1%, and the VXO shot up over 10% to close above 17. Thursday, stocks in Asia declined just slightly and in Europe rose just slightly. In the U.S., unfounded euphoria continued in stocks, rising 0.6% on low moderate volume. Precious metals again were hammered—down over 2.5%. Gold dropped below $1650 per ounce and silver broke below $30 an ounce. Perversely, the VXO changed relatively little.
Friday, Asian stocks retreated 1% and those in Europe declined 0.3%. U.S. stocks declined 0.9% on high volume—presumably triggered by option expiration trading. For the week, stocks gained 1% but precious metals lost 5%. The loss in precious metals makes sense, since it is more likely that spending cuts will be enforced in the U.S. The 1% gain in stocks makes no sense.