Now the Week Really Begins: Will Anything Change?
Columbus Day's over and the real action begins this week. After all, the bond market was closed for Columbus Day, even as stocks were traded. (Does anyone know why bond markets close on Columbus Day? Does it have something to do with the fact that banks traditionally closed (and many still do)? So everyone's in the soup today, and we'll have to see whether anything changes the recent uptrend in stocks and commodities.
Our take (so far): Stocks have staged a bear market rally that could continue for a bit; or it could end abruptly. Bonds remain strong, but are resting for now. Precious metals appear to be the one interesting area for the future: they've broken through 1160 resistance (which previously served as support). We caution, though, that PM's have been a big disappointment over and over again in previous moves up. Therefore, we'll take some time before any additional commitments to this area.
One thing hasn't and likely won't change, though: financial repression. Last time we referred to its toxic effects on the majority of us. We continue to earn nothing on our "safe" money which includes, bank savings, bank CDs, US treasuries (specifically the short end), and money markets. So we either languish in no man's land with our safe money, or we take risks with it in order to earn something. That's essentially disordered. You ultimately can't achieve reasonable balance when you get nothing for your cash.
Meanwhile, in an IMF meeting over the weekend, officials expressed frustration with the Fed, but not because they care about you and me. They're tired of the uncertainty caused by the drawn-out drama of the Fed saying they'll raise interest rates, then pulling back at the last minute. Even emerging market officials, knowing a hike in rates would negatively impact their economies, prefer the Fed act sooner rather than later. One surprisingly frank comment came from a Malaysian official:
And yet, on balance, the consensus appeared to be that the drama will not be resolved; the wait will continue:
Our take (so far): Stocks have staged a bear market rally that could continue for a bit; or it could end abruptly. Bonds remain strong, but are resting for now. Precious metals appear to be the one interesting area for the future: they've broken through 1160 resistance (which previously served as support). We caution, though, that PM's have been a big disappointment over and over again in previous moves up. Therefore, we'll take some time before any additional commitments to this area.
One thing hasn't and likely won't change, though: financial repression. Last time we referred to its toxic effects on the majority of us. We continue to earn nothing on our "safe" money which includes, bank savings, bank CDs, US treasuries (specifically the short end), and money markets. So we either languish in no man's land with our safe money, or we take risks with it in order to earn something. That's essentially disordered. You ultimately can't achieve reasonable balance when you get nothing for your cash.
Meanwhile, in an IMF meeting over the weekend, officials expressed frustration with the Fed, but not because they care about you and me. They're tired of the uncertainty caused by the drawn-out drama of the Fed saying they'll raise interest rates, then pulling back at the last minute. Even emerging market officials, knowing a hike in rates would negatively impact their economies, prefer the Fed act sooner rather than later. One surprisingly frank comment came from a Malaysian official:
“Delaying the increase would not solve the situation,” said Sukhdave Singh, deputy governor of Bank Negara Malaysia. “If it is a case that the emerging markets have taken on too much debt, there will be a day of reckoning. Delaying an interest-rate hike does not necessarily address that issue.”So he's willing to take a hit just to get the drama resolved.
And yet, on balance, the consensus appeared to be that the drama will not be resolved; the wait will continue:
Officials say they are watching every word from central bankers in the world’s largest economy. They face at least a few more months of waiting. “Everyone talked about September, then they were talking about December,” said the Paraguay central bank chief, Carlos Fernández Valdovinos. “Right now, here, after this meeting, everyone is talking about January.”And for us ordinary citizens, nothing changes in the end. We continue to live under the financial repression that, while not overtly sending us to the poor house, continues to cook us like frogs in a gradually warming pot of water.
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