What "Should Have" Happened Yesterday
Yesterday stocks fell. Bonds or gold - or both - "should have" risen, especially bonds. That's been a pattern for a while now. But neither did. OK, gold rose a hair. But that "hair" was nothing compared to the drop in the major stock averages. And bonds decreased slightly. But rather than speculate about why things didn't hold to previous patterns, let's look at a couple of interesting facts.
First, Friday's jobs report. "Everyone" hailed this as a sign of economic Nirvana. Bonds plunged along with gold. A little digging reveals that 80% of the increase in jobs came from the hypothetical "birth-death" model, not hard statistics of actual jobs created. In addition, most jobs gained were in the 55 and over bracket, not the 25 - 54 bracket. Those 55 and over have no "pricing power": they takes what they can gets. Think: Walmart greeters. OK, so everyone hired wasn't a Walmart greeter, but you get the picture. For this we get a mighty "Ole!"?
So with that, the picture painted - dramatically increasing employment due to a strong economy - the markets sell bonds, in anticipation of both the Fed raising interest rates, and yields in general rising in bonds. While a December rise in rates may well have been engineered by this jobs charade, we won't hold our breath for a continuing series of rising rates due to a significantly improving economy.
As for gold, it pays to know people who have not only special investment insight, but also a perspective of investment trends based on experience and a knowledge of history. Such a person - Chris Weber - pointed out recently that gold fell Friday because a belief that if interest rates rise, gold will fall. And one can certainly have observed that interest rates fell during the great gold bull market of 2001-2011. However, during the last great gold bull market during the 1970s, interest rates rose - and rose dramatically. Gold rose in the face of this.
Looks like the markets, already disordered by the Fed's repressive holding down of the Fed Funds rate since 2008, may be further disordered by the ignorance of the crowd. Could the lack of knowledge and understanding of history, a fairly recent phenomenon perpetrated by our upside-down educational system, now be coming home to roost? Whatever the reason, someone - or many someones - are out there trading based on incomplete, even false, understanding. Add this to Fed tinkering, and we've got a doozy of situation in the financial markets.
Has all this been ginned up to convince us that the economy has been and continues to improve significantly? And is such ginning now being ratcheted up in order to portray solid economic growth under a Democrat administration, now that elections are coming up.
Just a thought.
First, Friday's jobs report. "Everyone" hailed this as a sign of economic Nirvana. Bonds plunged along with gold. A little digging reveals that 80% of the increase in jobs came from the hypothetical "birth-death" model, not hard statistics of actual jobs created. In addition, most jobs gained were in the 55 and over bracket, not the 25 - 54 bracket. Those 55 and over have no "pricing power": they takes what they can gets. Think: Walmart greeters. OK, so everyone hired wasn't a Walmart greeter, but you get the picture. For this we get a mighty "Ole!"?
So with that, the picture painted - dramatically increasing employment due to a strong economy - the markets sell bonds, in anticipation of both the Fed raising interest rates, and yields in general rising in bonds. While a December rise in rates may well have been engineered by this jobs charade, we won't hold our breath for a continuing series of rising rates due to a significantly improving economy.
As for gold, it pays to know people who have not only special investment insight, but also a perspective of investment trends based on experience and a knowledge of history. Such a person - Chris Weber - pointed out recently that gold fell Friday because a belief that if interest rates rise, gold will fall. And one can certainly have observed that interest rates fell during the great gold bull market of 2001-2011. However, during the last great gold bull market during the 1970s, interest rates rose - and rose dramatically. Gold rose in the face of this.
Looks like the markets, already disordered by the Fed's repressive holding down of the Fed Funds rate since 2008, may be further disordered by the ignorance of the crowd. Could the lack of knowledge and understanding of history, a fairly recent phenomenon perpetrated by our upside-down educational system, now be coming home to roost? Whatever the reason, someone - or many someones - are out there trading based on incomplete, even false, understanding. Add this to Fed tinkering, and we've got a doozy of situation in the financial markets.
Has all this been ginned up to convince us that the economy has been and continues to improve significantly? And is such ginning now being ratcheted up in order to portray solid economic growth under a Democrat administration, now that elections are coming up.
Just a thought.
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