It's a good time to be on vacation, as the market appears to be. Movement took place between 9499 on a theoretical low to 9671 on the high. I watched by iPhone a few times on the beach.
Traders I would think would have been able to buy for the new signals. We emphasize the count is now 10 to the call; any more upside that is possible, before we re-project the Dow, should be no more than 25%
The USD continued to lose value, the German bund notes selling for more, and commodities were affected.
By 6.30 a.m. futures were down over 70 points, showing a precursor to the market energy. Fear was building back up in the market during overnight trading. New China restrictions brought fear that there would be a Chinese/American trade war, and it's likely. With oil down, ships are more competitive with freight rates, and with factories worldwide not at capacity (not just China) we may see a bit of a consumer war begin.
But remember, by now China has managed to seize up many of their own natural commodity resources (buying up Australia, Africa), etc.
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As we study the various reports that come at us pay special attention to the GDP and CPI reports, as they are two of the most important indicators published. With varying degrees of focus, central banks base their rate decisions on the health of the economy and the rate of inflation growth. Thus, knowing the latest GDP and CPI results, and how they are being interpreted by the market, can help traders formulate an opinion on where interest rates, and therefore, currencies, may go in the future.
In the developed world, central banks rarely have to worry about trying to keep the GDP in check. However, when growth slows dramatically, or begins to turn negative, central banks cut interest rates. We saw the downside of this in the Bubbles Greenspan era of low interest rates, without forethought, and we see it now under Bernanke, forced to keep rates low to stimulate economic growth. CPI is what Bernanke will watch here, to see if inflation is beginning to show. If the CPI decreases, it is construed as the lessening of price pressures.
A simple rule: A higher CPI tends to be bullish for a currency, and a lower one bearish. How the USD fares affects Gold, and our U.S. Treasury debt, and the willingness of others to back our credit.
What most Americans fail to understand in "things aren't that much better yet" is that we are unwinding a giant ball of string, that has mines attached throughout. The Fed has:
1. Lowered rates to near 0%
2. Increased its balance sheet to more than 2 trillion
3. Created a variety of liquidity programs
4. Began paying interest on reserves as it moved into what economists call "quantitative easing" modality.
We as a country created this mess, by our own bubbles, by who we elected, and how we allowed the country to be run, and by allowing lobbyists to run our 540 leaders. Greenspan, who helped create this bubble, now believes it is inflation we must be concerned about, not deflation. Bernanke's job is to all the stimulus (which had to be created on debt) to work WITHOUT sparking a historic round of inflation.
Most Americans believe the stock market goes up, and taxes go down, when Republican are in office. Historically, part of this is true. The stock market DOES not hold highs during a Republican administration, and taxes are cut.
But, historically, Republicans build larger deficits (surprised?) than Democrats.
As Americans struggle with even understanding the healthcare issues, try to justify the 428% profit increases health insurers have managed since 2003. Why do medications cost more in the U.S.?
If you had to pay your own insurance (where it were no longer a benefit an employer offered because of cost) could you afford to do so?
Is breeding competition rather than allowing collusion between such companies truly "socialism", or have we yet again been played in the fear game of the "government taking over".
We should be more worried about our rights of privacy under You Tube. The world has changed.
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