UPS AND DOWNS

Tuesday was an altogether funny day and what did we really learn? We're still unsure at this point. Stock markets gave back plenty of recent gains - but rallied on the close to make the bearish "I told you so!" pundits look a little silly.

The headline at marketwatch.com overnight read, "Tokyo, Asia slide early" appears to be a lawsuit waiting to happen from Pacific bulls suffering a fit of apoplexy at the glaring headline only to read that the fine print reveals a marginal 0.3% loss.

Disappointment grew shortly after the opening bell on Wall Street as weakness emerged in data for housing starts. Quite why, we know not. We've said for the longest time that the sizeable inventory overhang coupled with a lack of compelling reason to dive back into housing means that any bounce should be taken as a sign of stability rather than a sustainable rebound.

Wall Street apparently used the day to bank recent gains and marked down share prices.

Meanwhile the dollar rebounded by default. The story of the day was not one of independent dollar strength as much as dependent Canadian dollar weakness. The dollar's revival was pretty lame and largely caused by a big hop out of the Canadian dollar following a warning shot across the bows from the Bank of Canada as it sounded off about the perils of a strengthening domestic currency. U.S. dollar strength was not an order of the day.

Indeed when all said and done the result was a rally in the price of gold. Lame producer price data sidetracked investors who concluded that low interest rates might be here for a long time. That of course only increases the appeal of precious metals as a store of value.

 
The Supreme Council of the Secret Order of Jurojin

Tyche Research