Gold is falling and so is the dollar. The general media reported that gold was falling due to the strengthening Euro. Funny, gold is denominated in US dollars. You would think the price of gold would move with the value of the dollar. Maybe it's just me. For the past year, the Dow has been inversely moving with dollar. Now the dollar is falling and so is the Dow. What's changed?
Frankly, Mr. Obama is probably scaring the bejeepers out of the rest of the world with his assault on the American public. His team is busy raising taxes, bludgeoning business, and expanding regulation while spending like a drunken sailor. Europe's leaders have been preaching 'austerity'. So, it would make sense that the Euro would increase in value relative to the dollar. It would also make sense to sell the US assets as Obama's policies are those of destruction.
Consumer confidence plunged in the survey released on Friday. The previous confidence survey was up the most in a year. Why is consumer confidence gyrating so wildly? Supposedly unemployment has been declining. Supposedly real estate has stabilized. BP capped their leaking well in the Gulf. Corporate earnings were decent in the past week. So why the selloff on Friday?
The Senate passed the financial reform package authored by Frank and Dodd. Great. More regulation. Now we have a tax code thicker than the Bible, a health care tax code thicker than War and Peace, and now we have financial regulations to match. At some point, the heavy hand of the government will weigh down investors. The stock casino may be the leading barometer that we have reached the end. Lower highs and lower lows are a downtrend. Since we did not make a higher high, the Dow looks poised to make a lower low. That would be somewhere below Dow 9,700. Of course, Bernanke and the PPT could intervene. Maybe they will offer another trillion in 'stimulus'. Maybe they will buy a trillion in stocks. The ten-year bond yield is again below 3% and will soon be at 2%. That tells us that no one trusts the US government. If Ben doesn't save us on Monday, go short. But don't forget to cover just before someone tells the dopey Fed that a downtrend in the market casino might be signaling more weakness. Of course, the Fed's numbers won't confirm it. Their numbers are bogus anyway. Oh yeah, maybe that's why the indexes are falling.