Markets

[[wysiwyg_imageupload:2255:]]By JW Jones

The price action in precious metals and oil this past week has been breathtaking. The last time we have seen this much volatility in commodity prices was amidst the financial crisis in 2008 and the early part of 2009. Does this mean we are at the brink and risk assets are going to decline precipitously? Obviously that question cannot be answered with any certainty, but the underlying price action in the S&P 500 has been relatively strong compared to gold, silver, and oil.

Talking heads everywhere are predicting the commodity bubble has burst and pointing fingers at excessive speculation in silver and oil. Margin requirement changes in silver futures have been fingered as the primary catalyst for the nasty sell off. Silver had gotten way ahead of itself in terms of price and parabolic moves higher are usually followed by parabolic moves lower. For silver buyers on Friday, April 29 a painful lesson has been learned as their investment has declined more than 30% in 5 days.

[[wysiwyg_imageupload:2248:]]By Gary Dorsch

One year ago, few traders were expecting a pullback of any significant degree, with the Dow Jones Industrials perched above the 11,000-level. Traders had become complacent after a year long advance, in which the Dow Industrials had risen +70% above its bear market low, while retreating only twice for minor pullbacks. Traders stopped thinking about potential dangers, and started believing the risk of another bear market had vanished. Yet simmering beneath the surface was the specter of a sovereign debt default, rivaling the size of Lehman Brothers', and threatening the world economy with a "double-dip" recession.

Tech Talk for May 4

By Richard Mills

When looking for a dominant investment theme the approach I take involves looking at global or big picture conditions. I study trends, read the news, basically watch and listen to what’s going on in the world. What I’m looking for is something so powerful, so dominant, it’s going to be my guide to where I invest – I focus on the factors that I think will drive headlines going forward.

[[wysiwyg_imageupload:2220:]]By Brian Pretti

In recent discussions we've highlighted the fact that for the average US consumer, the cost of living is clearly rising. Without question, we know the Fed has been hell bent on "reflating" the US economy. In the globalized financial markets of today, Federal Reserve actions no longer primarily influence the US alone, but rather have consequences across worldwide asset markets. Certainly a part of the Fed's focus on reflating the US economy has been to overtly debase the US dollar via unprecedented money printing. And if dollar debasement is a proper measure of Fed monetary policy success, then they've hit it out of the park with this one as the dollar has recently been flirting with all time lows. That might be great for US export driven companies, and has been as per their earnings growth, but for the average US consumer so far US Federal Reserve policy has driven up the cost of household energy and food necessities while wage growth stateside has languished.