I was attending a birthday event for my niece this evening and thus am unable to put together a full post due to time constraints. I am aiming for a Saturday wrap up and entertainment post instead. With everything going on, a little reading and thinking is in order anyway before writing a post.
My Apologies to the Gold Market
The author of Economic Disconnect would like to extend his heartfelt apologies to any and all in the gold market. It was my entering this morning that single handedly crashed the spot price for gold. While I know I usually have this effect, I was hoping that I would go unnoticed with all the drama happening. I am sorry and hope we can still be friends, or at least that you will not burn my house down. SORRY!
Seriously, the action in gold today made no sense. Luckily for me my small order was lost for most of the day and was not filled until after lunchtime. I got a nice 6% loss in one day, but it could have been much worse (about 18% from the open!). Small miracles!
Volatility - Hallowed be Thy Name
Everyone in my office area was running around this morning talking about the Nikkei crashing and a possible "circuit breaker" day here in the USA. While I would expect that from people that read this blog, this was coming from people I have never even heard speak about the markets! Wild Stuff. Suddenly everyone is watching. After a crash of 10% on the DOW at the open, the markets rallied harsh and were up on the day at one point. Stocks closed slightly down.
With the Lehman CDS auction all the rage, maybe that was the catalyst. Maybe a big hedge fund blew up. Maybe lots of things happened. We might know tomorrow or we may never know or there is nothing material to know. Who knows, you know?
Market Ticker has some sharp comments today, and you should take a look:
"Open Market Operations) at The Fed. Read this report carefully. Note that there are no Agencies and no Treasuries left on The Fed's balance sheet. All gone. All that is left is $80 billion of crappy MBS. Bluntly, without printing raw money, The Fed is out of Treasuries with which to lend into the market, and thus cannot perform OMO any more; they must do "other things" (like print money.) We are now officially into the twilight zone and Fed Solvency is an issue on the table. President Bush spoke again but none one word about forcing transparency among financial institutions. Raise cash now and be prepared for potential essential good and service disruptions as the supply pipelines could begin to go dry on these as soon as early next week."
I had come to similar idea on FED printing and that is why I got into gold (sorry again guys!). With a G7 meeting which I am sure is going to involve money creation the world has never seen, something has to give. As far as supply disruptions and the like, I wish I could say that was impossible. But it is not.
Have a good night.