Buzz Bits: Dow and Nasdaq Finish Mixed
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Gold Rolls Over - Michael Paulenoff - 3:12 PM
The streetTRACKS Gold Shares (GLD) has rolled over in a serious way today after climbing for the past week towards a retest of the January high at 92.58.
The fact that the rally stalled at 91.46 yesterday and has reversed to the downside with such power today suggests to me that it represents a secondary high within a larger developing intermediate-term top pattern that will have the power to press prices to the 85.00 area prior to completion.
Click to enlarge
Year of the Rat? - Ryan Krueger - 2:26 PM
The FXI has been cut by more than a third of its value. Yet, the debate and betting against China has intensified. Last week saw the much anticipated launch of a short China and levered short China funds. Ironically my own banker asked me about the bubble in China today. When we look back at this period I wonder if a big clue to how little we understood what was really going on over there could be found in comparing the trading in Chinese ADRs, ETFs and especially the short fund launch during the same week that the stock market in China was… ahem… closed all week.
I continue to believe that despite violent rides when you own stocks of any kind that are commonly owned, profitable, and therefore a source of funds, that it will be worth the risks to continue to construct positions around a planet shaking shift that didn't just start and is not about to just stop and this is selling or avoiding the stuff that China makes and will drop prices on thanks to new competition and free trade (I hope Congress is still on board with those crazy concepts), and buying the stuff that China cannot make.
Agricultural commodities remain at the top of my list as I simply believe and data would confirm that we are outgrowing the earth. As buzzed about before, the lock limits get the headlines, but the stories are being written on the ground. There were recently three deaths during a stampede in a Chinese market for a special on vegetable oil.
Fertilizer, seeds, irrigation, tractors are represented by several stocks that will suffer huge pullbacks but find themselves with historic tailwinds. My fellow protein fan and friend Jeff Macke ask a great question of the Potash (POT) CEO last night on Fast Money, when digging into the buyback program for its shares. He confirmed they were active in January, which is not a mild statement considering the prices. The group is not without risks, but I believe the demand for its products and shares will prove even stronger.
Used To Be Insured Bond Update - Bennet Sedacca - 9:35 AM
Bonds that were trading on their insurer's ratings, like FGIC and Radian (RDN) are trading, well, like they should. On their own merits.
I have seen some BBB rated underlying paper, which was trading on a 4.50% yield now trade closer to 5.50-5.75%. It seems some distinctions are now being made in munis, like they are in corporates. In fact, if I had to start a business, I would start a muni bond research boutique to sort through the 50,000 issuers.
Yesterday I mentioned failed auctions in ARS (auction rate securities). A failed auction is one where there are more sellers than buyers. When the auction fails, you can't get out, but you do get a higher, 'maximum rate'. Which is great for yield, but bad if you hate Roach Motels. People and institutions invest in these for liquidity, and you call and ask for your money and the broker says 'nope'.
This is a very large problem IMO. Very large.
Between the Ticks - Jeffrey Cooper - 8:39 AM
- General Motors (GM) posted the largest quarterly loss ever for a U.S. auto maker.
This, despite record revenues of 178 billion - thanks to currency translation - with a sprinkling of emerging growth on top.
- It underscores the notion of why the U.S. has not intervened in the currency markets to support the dollar. The Treasury must have wanted it down.
- Priceless: this morning's quote of the Mae West line by Warren Buffett about the bond insurers: "I was snow white, but I drifted."
- So, I'm wondering who he thinks Dopey and Sleepy are?
- The IMF announced over the weekend it will be selling gold beginning in April. It will be interesting to see the behavior of the metal on the news this month and how it closes the month of February as the GLD weekly chart shows a six month near vertical advance. I have been looking for a top in gold and for it to begin to decline by the end of February.
- Enjoy the day Minyans!
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