Note – I said earlier this week that most markets are likely to be influenced going forward for several days or weeks by the employment number that has just been released this morning. While it’s quite early in the day, I do believe that assessment shall be proven correct.
For the second month in a row, I tuned in to TOUT-TV to see the discussion just prior to, and after, the release of the employment numbers. Last month, the panel (which is always made up of mostly members of the “Don’t Worry, Be Happy” crowd and the lone “sane” mind of Rick Santelli) was hi-fiving themselves and announcing happy days were here again. The four-star General of the bunch, Steve Lies-man (as in he lies man) did all he could as usual to knock Santelli down.
Right after the release the panel went into spin-mode and of course the one sane voice of reason (Mr. Santelli), was attacked at the end by Lies-man. The number sucked-period! Despite the trillions of dollars being created out of thin-air, despite all the rhetoric out of the Obama administration, and of course the “Don’t Worry, Be Happy” crowd on Wall Street (and much of the lap-dog media that follows it), the fact is Wall Street has benefited but Main Street hasn’t. And this has once again set us up for another crisis, only this time it shall last longer and be more severe.
U.S. Stock Market – I said we would see the rally into new highs continue for a relative short period but to use it as a period to greatly lower (not expand) exposure to general equities. Because the FED has painted itself into a corner, I continue to state its hogwash when you hear the b.s. about ending QE whatever #. Because of this, the stock market can stayed supported as the spin doctors convince the public and themselves that the FED has more silver bullets. In the long run, the David Stockman’s of the world will be proven right and the Steve Lies-man wrong, wrong, wrong.
U.S. Dollar – Europe remains in crisis mode, the Japanese throw the kitchen sink at their man mouth economic woes and up until the employment number it look like the U.S. Dollar was the king currency by default. But wait a minute, maybe the Goldilocks’ scenario being spewed by the PR machine of Wall Street has a hiccup to deal with now?
The way the Japanese bond market traded Friday strongly suggests we’re in for a ride in the coming days in regards to Japan. This shall obviously impact the currency market as well so a “leave-alone” approach for now is wise.
U.S. Bonds – It’s a little bit frustrating to not yet see the inevitable sell-off but with all that FED money sloshing around financial institutions, it has to go somewhere and bonds continue to be the place… for now.
Gold – For far too long, members of the Crimenex have said this to us few remaining gold bulls. And while they have seemingly pulled out all the stops (literally), gold has managed up until today to bend but not break. In the meantime, sentiment has become extremely negative and the hedgefund community (and much of the financial media that lives off it) has piled into the short camp.
Today’s number was supportive for us few true gold bulls but until we close above $1,620, we’re still on the defensive. Here’s to a buffet of bear meat by the Memorial Day celebration (if not before).
Mining and Exploration Shares – Every time one even tries to think the worse is over… POW! But this week felt like real big-time capitulation. Badly beaten, I can’t afford (literally) to stick my head out of the foxhole yet but I suspect I can once we get above that $1,620 gold price.