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Buzz Bits: Dow, Nasdaq Turn Lower


Your daily Buzz & Banter highlights...

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Note how some of the recent correlations are falling away... - Lance Lewis - 1:54 PM

The old correlation since Feb 27th was:

Yen up = everything (stocks, gold, commodities, etc.) down.

Following yesterday's strength in gold and its shares despite a weakish equity market, today we added another so-called "headwind" (yen strength).

Today, the yen is up 0.6%, and the stock market is mostly lower (that correlation appears to be continuing although less so than in the recent past), while the gold complex is ignoring all of it, as gold is up a percent and the HUI is up over a percent.

In other words, we have a second day in a row where we see the gold complex is breaking free from its recent correlation with the equity market (and the first clear break from its short-lived negative correlation with the yen).

I wouldn't expect a moon shot in the gold complex just yet, because the market is still skittish. But as confidence grows that gold is breaking away from the equity market, we should see upside acceleration.

Remember: Stagflation is the most bullish environment imaginable for gold, and we continue to march steadily towards that destination...

Position in gold shares

Is that an avalanche coming my way? - Fil Zucchi - 1:40 PM

We have discussed ad nauseam the day the Fed would have to come to grips with the consequences of its own reckless printing of money. Some of us have also been suggesting that we were reaching the end-stage of the game for so long that we don't really care to remember when we started. With that said, it seems that different areas of the markets are betting on such disparate outcomes that the Fed finally can't win.

  • The Treasury Inflation Protected Securities (TIPS) are now showing the highest expectations of inflation in the last six months. Given that the Fed has told us repeatedly that "inflation expectations" are as, if not more important than inflation data itself, it would seem hard for them to take a dovish tone toward rates.

  • In the middle, it certainly feels like equity players seem to have an expectation for a dovish message, believing, rightly or wrongly as it may be, that it will get the market back on the northbound train.

  • At the far end of the dovish spectrum, huge bets have actually been placed in the Eurodollar futures that rates will be cut in the near future.

IMHO opinion, should the Fed signal any shift toward lowering rates, it will have taken yet another step toward ultimately sanctioning a hyper-inflative posture toward any kind of financial problem. This is not to say that hyper-inflation will hit tomorrow, but keep in mind that between M3 money supply growing at low to mid double digits year-over-year, and the self-reinforcing nature of inflation, this is like a snowball growing bigger and rolling faster with every passing day.

With Time Expiring... - Kevin Depew - 12:48 PM

  • New point and figure buy signals are continuing to lead sell signals, but by a slimmer 10 to 7 margin here.
  • Some interesting currency movements beginning to show up in some of the currency ETFs.
  • The CurrencyShares Swedish Krona (FXS) broke a triple top today.
  • The CurrencyShares Australian Dollar (FXA) has broken a quadruple top today.
  • The CurrencyShares Euro (FXE) broke a double top yesterday.
  • Minyan Fritz noted this morning that Beazer (BZH), Centex (CTX), DR Horton (DHI), Hovnanian (HOV), KB Homes (KBH) et al, are all trading below their 200-day moving averages.
  • Minyan Curtis pinged me as well to note how that Accredited Home Lenders (LEND) COO John Joseph Lydon has apparently unloaded 73,250 shares between $4.25 and $4.50.

Pretty Freaky, Sis - 10:37 AM

  • Minyan Sean sent along a great link from the Freakonomics blog regarding drug pricing at CostCo (COST) vs. big drug chains.

  • In a freaky coincidence, JetBlue (JBLU), my daughter's pre-school and New Jersey motorists all seem to experience snowfall in a much different and more severe way than the rest of the world. While the rest of us wonder whether or not it's even worth shoveling, JetBlue et al are closing up shop, boarding up the windows and hording bottled water. I gotta say, it raises concerns in my mind about all three.

  • I'm pitching the idea of an Irish-themed Fast Money tonight. Without giving anything away, I can say my script starts with a sip of Guinness (gallingly British-owned by Diageo (DEO)) and ends with us burning down a Fish & Chips shop.

  • Television being what it is, we'll most likely just end up sticking Strazzini in a tam o' shanter.
No positions in stocks mentioned.

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