September 11th, 2012
in Gary's blogging
Closing Market Commentary For 09-11-2012
The DOW remained up nicely at +0.52%, but the other averages were down around the +0.30%. I expect to see some sparkler action, definitely not fireworks, in the premarket tomorrow as the German High Court announces its decision. It is looking more and more like it is not going to be a clean “Ja” and that will have an effect on the World markets.
Today was slow trading, little volume and virtually no news to wrap the fish in. Markets closed as quietly as they opened; flat and afraid!
Here is more on my thoughts concerning the GHC decision tomorrow morning being something other than a straight forward 'Yes'. I have said all along that the German people would not allow willingly to have another non-German fiscal entity have sovereign final word on THEIR monies.
So we wait for the Verfassungsgericht to deliver its verdict of life or death for the euro at 10 AM Wednesday, Karlsruhe time.
The German constitutional court is not to be trifled with. Its ruling on the Lisbon Treaty in June 2009 was a thunderous defence of German national sovereignty, the greatest legal shock to the European order since the launch of the Project in 1957.
The eight judges fired a cannon shot across the bows of Brussels and the European Court, asserting the supremacy of the German Grundgesetz over EU law as a permanent principle.
The court said Germany must be prepared to "refuse further participation in the European Union" if EU aggrandisement threatens German democracy any further.
On Wednesday they rule yet again, this time on the European Stability Mechanism (ESM), the €500bn – very permanent – bailout fund. It is widely assumed that the court will bow to massive political pressure and waive the fund through.
This may be so, but 37,000 plaintiffs have filed cases in a remarkable outburst of civic protest.
The RRR** was very narrow all day today and any trades will probably end up on the unprofitable side as long as this market remains flat with low volume. Swing trading is at your own risk and being the market is at a crossroads of sorts, I would prefer to sit on my hands rather than risk guessing incorrectly.
The DOW at 4:00 is at 13323 up 70 or 0.52%.
The 500 is at 1433 up 4.49 or 0.31%.
The $RUT is at 841.90 up 2.53 or 0.30%.
SPY is at 143.78 up 0.28 or 0.20%.
The trend is up and the current bias at the closing is down.
WTI oil is at 96.95 trading between 96.08 and 97.32 and the bias is neutral.
Brent crude is at 115.29 trading between 114.35 and 115.48 and the bias is positive.
Gold is up today at 1732.19, trading between 1725.85 and 1738.05 with a negative bias.
Dr. Copper is at 3.69 up from 3.65 earlier.
The US dollar fell from 80.60 earlier to 79.93 and is currently trading at 80.00.
The 500 at the close.
The DOW at the close.
“Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would pump more money into the financial system.
Gold prices have rallied on past monetary stimulus measures. Investors tend to flock to gold on fears that excess liquidity would erode the value of fiat currencies and spark inflation.
The precious metal is widely considered a hedge against rising consumer prices and a store of value.”
I couldn't agree more. Best definition of the Keynesian Cult I seen for a while.
I have often identified Keynesian economists and the Federal Reserve as cargo cults. After the U.S. won World War II in the Pacific Theater, its forces left huge stockpiles of goods behind on remote South Pacific islands because it wasn’t worth taking it all back to America.
After the Americans left, some islanders, nostalgic for the seemingly endless fleet of ships loaded with technological goodies, started Cargo Cults that believed magical rituals and incantations would bring the ships of “free” wealth back. Some mimicked technology by painting radio dials on rocks and using the phantom radio to “call back” the “free wealth” ships.
The Keynesians are like deluded members of a Cargo Cult. They ignore the reality of debt, rising interest payments and the resulting debt-serfdom in their belief that money spent indiscriminately on friction, fraud, speculation and malinvestment will magically call back the fleet of rapid growth.
To the Keynesian, a Bridge to Nowhere is equally worthy of borrowed money as a high-tech factory. They are unable to distinguish between sterile sand and fertilizer, and unable to grasp the fact that ever-rising debt leaves America a nation of wealthy banks and increasingly impoverished debt-serfs.
** RRR = Risk Reward Ratio
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Written by Gary