Market Topping?

In my post January 2014, The Great Unwinding Starting in 2014, I called out mounting evidence that the global economic ponzi scheme was starting to crack in 2014.   Since then, the market has made valiant attempts to re-establish a sustained bull market, but has failed to materialize.

We had Ben Bernanke leave the Federal Reserve, replaced by Janet Yeltsin.  I think Ben knew the top was potentially near, and wanted to exist on a high note.  I am not a Ben hater, I just don't think any one person can fix the global economic system, and his attempts where I believe in good faith given the many constraints of the current model.  But if I was to believe his actual words, he is naive to think buying time by relaxing laws and policies will 'teach' people to be economically responsible.
World Ward 2 is best example how appeasement doesn't lead to better results.  Germany now is also a lesson on how LACK of appeasement does not lead to better results.

Before I go on, credit where credit is due, Gary of the Smart Money Tracker posted market topping as a possible scenario right now.  I believed the market has been topping for the last few weeks if not since January.   But that is a feeling, and I relied on Gary to give a harder signal to trigger this post.

When in doubt, I try to go to the MACRO view of the markets.  In my post about long term investing, how to spot a market top, we have NOT yet had a signal this has occurred.  So if you want to wait for the signal, please do!  Read my post When to buy stocks or get out of the market . I encourage everyone to review their holdings and pick hard stops.

Below is a picture of the current market valuation, and I recommend watching this video making a case of peak everything.

Assuming there is a near term top in the market now, the USD valuation should rise.  Latest USD chart of valuation below. Right now there is no indication USD will rise, but it isn't failing yet compared to recent years. (TheChartStore.com)

US 30 year interest rates, this is the most damning for markets.  The US government knows that interest rates for 30 year bonds MUST stay in the range below, or a crisis could trigger.  To force rates lower, we need a 'flight to safety' for investments, that is usually triggered by stock market valuation problems.  See my post on The Hard Road MUST be Taken on the global currency battle stakes.

Assuming safety is the play, I have to imagine gold is going to get hurt, and buying bonds is good now.  If the USD valuation breaks down, or interest rates break up then this assumption is likely wrong.  This is one of those periods in time, I see risk everywhere.  If the market falls, so should gold and gold miners.  HOWEVER, GDX is about to show it is entering into a bull market!  So I am torn.  I did lighten up GDX and GDXJ this past week and keep an eye out for what happens next.

Back to market topping.  A market usually tops with high fliers cracking first.  Here is a bunch of charts, while most have not shown a convincing top using 20-50 weekly SMA, many look toppish.

Technical Charting good for gold, good for miners, bad for bonds, bad for stocks

Ran across this video, does a decent job of showing chart technical's on gold, gold miners, bonds,  real estate.

The basic gist is once bonds start having interest rates rise for US bonds, stock market should get hurt and areas considered safe havens should rally.  Of course, we will all have to wait and see how this unfolds.
Below is a quick update of the 40 year trend for US 30 year bond debt.

Municpal Bonds

Back in 2008 I wrote a very short article calling out that Municpal bonds will run into trouble. Since then I had made it part of annual predictions that the municipal bond market would have issues. The city of Detroit has now declared bankruptcy, but this is a first major US city to go bankrupt, and I expect quite a few more to follow.
I won't give timelines, apparently when there is an issue, politics can kick the can much farther than I thought possible. Detroit has been bankrupt for years, but somehow they managed to not go legally bankrupt until now.
Its a pi-polar marketplace right now.  The reality seems grim, but the markets are levating.  If municpal bonds do start to see rising rates, this could be the begining of the phase 2 of this decade journey we are on.  Contagion spreading to the government bonds, the next bubble.  
I do think gold is near a bottom, if bonds start having issues, gold may start moving quick.   I suspect we are finally seeing the gift in gold I predicted back in 2009, quote.

The gist is, I plan to ride this next wave down short the market (not short resources). I'll start looking for rolling into precious metals/resources WHEN IT LOOKS LIKE A GIFT. 

If gold and gold miners don't look like a gift right now, not sure how much lower it must go to be a gift.

Good luck.

Market direction

When you look at all the news, corruption, revolutions, its pretty easy to point to the market and say it has to hit it. One thing that I have learned since 2008, is the market is not a pure report card of economic health. It is an almagum of politics, perception, and financial realities. So as I look at the market, I try to remove my predispotion to the view of problems with corruption, currency wars, problems with labor, and middle class crush. From purely a chart perspective, if the S&P500 traded between 1700 and 1500 for the year ahead, it would be a reasonbly decent outcome.

Aside from general market direction, we have my beaten friend, Gold miners ETF.

Best I can say for this thing is, what is down, probably may go up. Who knows, it can stagnate here or rebound. The spin seems to be the sector is beaten up, and time to buy. What I have, I'll keep, I really don't have the stomach to double down. This maybe a golden opportunity of a lifetime, if your not in, a little here is lower risk. Just take alook at the valuations, it hasn't been this bad since the economic implosion in 2008. Or wait for the red and blue trend lines to cross, that usually indicates its on the rise for a while. Then we have Gold (GLD), just plain ugly!

Best I can say here is, as long as it stays above the longer term trend line, still an upward moving asset. For the USD, it's demise is a tad bit overblown, its held up, although quite flacky in recent months.

So your guess is as good as mine. I do think there is ONE asset above all to watch, the cost of debt. I REALLY do think this is the entire story. Everything above is a sideshow. Why? Because in 2008 I warned (and many others) that the shift was from bank/private risk to government risk. The governments of the world have shouldered the burden of 'stimulous' for 4 year. Most governemnts have been burning the midnight oil on debt creation, and taking on risk assets. The US government buys 85 billion of the worst debt obligations from banks every month, taking them on. In effect, the problems are being buried in the good old faith and credit of currency system. So what we have here is a trend line of 30 year interest rates on the fall since 1981, and recently its been rising. If this trend ever breaks the downward two green lines, its pretty much over folks. I don't think the system can take rising debt costs.

So there you have it, market valuations high, Gold miners eating dirt, USD valuation holding, and US 30 year treasury rates, the foundation of cost of debt spiking in recent weeks. What is next? Tune in for second half of 2013 for the answer.

Market Crash closer than expected...or is it?

The Japanese bond market is breaking, with Japanese interest rates accelerating higher.
The Japanese stock market has had some nice sell offs last week.

The European union cannot fix their issues, and Greece just predicted 2007 employment level will be attained in 2076.

The US stock market has hit a nice parabolic blow-off rise last week, reaching extreme levels never seen.

All of this adds up to a market crash is quite possible around the corner.  But never fear, this will be followed by even MORE extreme responses by the central banks to save the economy by easing money creation.  Overall this isn't a bad thing per say, it just we don't know how this ends.  I do believe that gold miners after the extreme sell of of GDX down to 26 is approaching a bottom.  MAYBE another 20% lower? maybe?  I can't see it breaking 19 a share like it did in 2008.  In any case, we are closer to a bottom than 2 months ago.


I will caution all readers.  If this plays out badly for the world governments, we could see that this next leg will be one that has rising interest rates at it's heals.  The US bond market has seen rates drop for 25 years straight!  30 year bonds are near 3%, so this is also near a all time bottom.   For who would lock in at 1% for 30 years?

What doesn't go down, usually goes up.  If rates start to go up, all hell will break loose on our debt based society.  If you own bonds, it will be very hard to get out without taking a substantial loss.

Good luck, we all need it.

Easy Money Ahead, Invest in Precious metals

Let me repeat for readers who are not long term followers.  I am NOT a Gold Bug.  I do not believe Gold is money, or that the federal reserve bank printing of cash is entirely responsible for rising resource prices.

With that said, today the ECB will announce details around a new save the Euro plan, which is being hinted at to include bond buying.  Once the ECB institutionalizes buying boys (aka Quantitative easing), the euro may be on a path to stability.  For all issues can be simply responded to by buying bonds issued to prevent risk rates to rise.

In effect, simply print money.

In principle, I think this is a good thing, in practice it will likely lead to some very unexpected adverse effects.

One of the effects is the western (and to some degree eastern) economies have now established.

1) Large companies are not permitted to go bankrupt
2) Fix income based on risk assessment will be short-circuited for governments and companies that politics deem safe havens.
3) Governments are not permitted to go bankrupt (until it costs more to prevent then let it happen)

These will have repercussions, one of which is net "easy money".   The only question is can easy money over-come credit deflation.  It may not now, but some day (month, year, decade) it will, and when it does, it isn't going to be pretty.  Look how long the ECB has taken to get to the point of agreeing to buy bonds and "save" the euro.  Can you imagine when easy money has to stop? Lag times of years will be devastating.

So onto investing.  We may be at another "bottom" for gold miners.  Then again today the investment world may rally on easy money, and collapse next week.

UPDATE 9-7-12: ECB Unlimited Bond buying announced.  Friday gold and assets rally.  Will this be a new bounce or a head fake?

Now isn't this fun?  I am still in GDX & GDXJ 33%

US Federal Debt

Just wanted to take a quick moment to post about US Government debt.
Back in 2008, I posted about US debt, and linked to a movie called I.O.U USA.
That movie projected a scary budget debt for 2008 at 410 billion. (ended up 460 Billion).
In 2009, the final year for George Bush budgets, the debt was 1.4 Trillion.
Since then, Obama has managed to keep the deficit each about  1.3-1.5 Trillion.
This chart shows 2010,11,12 each one about 1.3 trillion per year.

So at end of 2009, US total debt was at 11.9 trillion.  the projected debt at end of 2012 is 16.4 trillion, a run rate of about 1.5 trillion per year.  I am confused why the site that I used doesn't align with the 1.3 trillion figure.  So lets go with 1.5 trillion per year for Obama, 100 billion more than final year of Bush.

That is a WHOPPING 41% gain in debt in 3 years!!

One can clearly see this is not sustainable.  Matter of fact, if the chart was a stock chart, many would call for stock collapse as it can't continue to be a parabolic rise. See below.

The key element to keep in mind is a DEBT BASED system with the chart above CANNOT continue forever.  However, there are many ways to morph this system.
One is to eliminate debt based system.  If US simply printed money or the Federal reserve bank bought 100% of US bonds, debt magically becomes irrelevant.

This of course can bring on new problems, one of which could be currency collapse.
But theoretically, it could solve the parabola above.

As for blame, well, there is blame for each political party.  Using the chart below, clearly every president since WW 2 was fiscally responsible, until Reaganomics.  Since then Reagan the big W clearly did much to blow up the debt.  If Reagan and Bush where fiscally responsible, we would have been debt free by the time Obama rolled in.   I hear much about how horrible Obama is, I am not a fan.  But he isn't any different than Reagan or Bush for budget responsibility.

I would love to see deficits of 460 billion, seems so reasonable now.....and I am sure in a few years 1.5 trillion will seem like the "fiscally responsible days".  Republican or Democrat, the outcome is the same, pander and kick the can, it is only a matter of the packaging.  

Moving into Natural Resources

I exited my Federal US bond fund inplace since January 2007 today.
I am moving into natural resources over the next few weeks.

I am convinced that Europe will print, USA will print, China will print, and the rest of the world will follow.
I am not calling for hamburgers hitting 100 dollars each.  I am calling for a rebalancing of a more equal distribution of the world resources, away from the west and more to the east.

Oil, Gold, Silver, select food, etc will all rise relative to USA past experience.

Even if I am right, the move I am making will NOT properly compensate for the future world, but it will help.
This isn't a mad-max prediction, world war 3, or fall of US government.


Simply put, China and India will get net richer 2.4 billion people, and US citizens will get poorer, 300 million, relative to each population.  Natural resources are one component to gauge the new reality.

Also Gary of the Smart Money tracker is bullish now, I strongly recommend signing up for his service.

Good luck!

10 Year US Government bond at new low...ever!

We are close to ringing the bell......the bell that signifies we are hitting the lowest yield EVER to be seen on US treasuries.  The 10 Year US bond yield is at 1.47% on 6-1-12.
Chart below can be found at clicking here:
Also notice that Black Monday in the 1980s was PRECEDED by a rate decline....possibly indicator in near term market fall?

How can this be? Isn't the US government issuing debt at a staggering rate? 1.5 Trillion+ per year, AND the 15  trillion of debt is rotating at some percent per month?    Why yes, it is.

Four years after the 2008 market crash, there is still a high demand for fixed interest, basically avoid risk.   There are many factors, including baby boomer demographics.  In droves baby boomers are moving into less risk as they enter retirement.  Also, there is the US as still the global currency, with countries around the world buying US bonds in an attempt to keep their currencies from rising.  China is the most obvious country who buys US treasuries in droves to peg their currency.  There is also the safe-haven play as Europe destabilizes and China deflates.

All of this results in a trading opportunity.  We are close to, if not already at, a golden opportunity to trade.  To bet AGAINST US Bond rates.  This play has been around for a while, and it has been a huge loser.  Those betting against US Bond rates have lost their shirts.    But here we sit, at 1.47 interest rates.  Will 10 year hit 1 percent? Maybe.  Zero percent, although possible, hardly likely.  At some point, when the rates are this low, you are better off in short term treasuries such as 3 months, or 1 year.  The difference is hardly worth a 10 year commitment.  At 1.47 we are close, if not at a bottom.  At 1 percent, there are plenty of other low risk investments that can compete for a 10 year commitment.

What does this mean for trading?  Well buying US bonds as a commitment right here is risky, if rates do start to rise, then your bond values bought at these levels will fall.  After all, if you have 10 year bond at 1.47 percent, who will buy it if brand, new, fresh from US government pays 1.55 percent?

The play here is to purchase instruments that gain value as interest rates rise.  I wouldn't recommend any large purchasing, just tiny amounts, and build the position as the rates decline, such as TNX (10 year US bond rate).  1.47 may be the 200 year low we will never see again, or maybe, it will hit 1 percent or lower in a panic.  But rest assured, these rates cannot stay here for 100 years, or even 10 years.  There are few bets in the market as lopsided as this.  It is true that we are in unprecedented times, and there is no guarantee that rates will rise in the near term, but time and history is on your side, if you have the patience.

Canary in Coal Mine - Japan

I have posted before that when Japan's economy becomes unmanageable, it will be the canary in the coal mine for the USA.   Sure Greece, Ireland, Spain, Portugal, Iceland, and others can be viewed as warnings.  But most of those countries have centuries of history of periodic economic resets.  Japan however is a different story, it is regarded as a conservative society and as the picture of stability.

So if Japan goes south, America better hear that message.

Yesterday Japan's Sovereign debt was downgraded

Fitch Ratings cut Japan's long-term foreign currency rating by two levels from AA to A plus, the fifth highest investment grade. It cut the more important local currency rating by one notch from AA minus to A plus. Both were given a negative outlook. - Reuters

Japan faces what most western countries face and China faces, a demographic nightmare.  See my post "Demographics is driver for economic growth", where I have a couple of odd suggestions on solutions.

There is a strong possibility the deal with China made in 2011 to buy US bonds directly was partially done to prolong America's ability to avoid a bond run.  However, I also believe that corruption never wins, and will delay the eventual same result.

Interesting times.

USA Circumvents Bond Markets for China

It is very evident by the actions by the US government since 2008 that preserving capitalism is not at the priority list.

International accounting standards were changed in 2009, as it remains today, with mark to fantasy accounting.

The Federal Reserve bank outwardly admits manipulation of capital markets to achieve it's goals.

It is now discovered that since June 2011 China has been given ability to circumvent open trading of US bonds and allowed a "direct bid" with the US for bonds.

This is new, and I am unsure if bad, but my gut says bad.  Why? Anytime there is large transactions without transparency it leads to corruption.   A liquid bond market where all US bonds are traded openly is less prone to manipulation.

All of this has become necessary as the system is no longer regarded as a system of respect, but of changing process to serve not the people, but the minority self interests.  In effect, the system is breaking.  Another hint of corruption is we find out about this in May 2012, and not June 2011.  Wonder why it wasn't proudly announced coupled with a transparent published trading record........

I am adding this to my series "Financial Ground Zero" of events that will lead up to the final event with US Financial and Currency system.

Bernanke Villain or Hero

I read a blog post or two, and saw picture of Ben Bernanke pictured as Hero.  Article goes on to say how there is much debate about Bernanke's actions, and what this will lead to.

For those not following Ben Bernanke, he is the chairman of the most powerful banking institution of the world, the private bank named Federal Reserve Bank.  This bank is not part of the US government, but does act in concert with US government co-operation.

Mr. Bernanke took extraordinary measures to prevent an all out deflationary collapse back in 2008.  Since 2009, normal accounting measures Mark to Market have been suspended as they are to this day.  Under the new order of super low fixed interest rates, corporate accounting changed to mark to fantasy valuations, the corporate earnings have never been better.

I actually don't have a problem with the dramatic steps taken in the time of pressure.  Some decisions may have been not the best, but overall at the time, the net result cannot be disputed by anyone.  The collapse feared did not materialize.

What I have a problem with is there is zero plan to return to normal accounting measured in place since the Great Depression.  Further, I have an issue with lack of any prosecutions at all for the trillions in fraudulent mortgage operations that have been clearly documented publicly.   Also I have issue that the US government has not had a budget since George W Bush and spends money as it sees fit, without any constraint.

These acts are a perversion that will lead to consequences.  Lets not forget WHY 2008 imploded.  Basically the Federal Reserve Bank allowed fraudulent asset bubbles to occur.  Ben Bernanke himself testified numerous times that the economy was rock solid.  He was either ignorant or lying.  And now he takes the credit for being right after all the drastic measures taken and saving the world?  The entire 2008 problem was partly to blame on him and his predecessor.

But I digress.  What I realized is I actually DON'T have a problem with Quantitative easing per say.   That is the Federal Reserve Bank purchasing long term US debt (30 year bonds) in the billions to artificially lower interest rates.   I used to until today.  Why the change of heart?

I realized, that my argument in the past of "what is money" and "gold is not money" align with what Bernanke is doing.  In effect, if 30 year bond rates go to zero interest rates, he is creating the scenario that cash can be printed with no interest attached.  This is in line with my thoughts of what currency should be.  Money should be created without a "bank tax".  Each US dollar you have in your hand, or in a bank, has a tiny amount of interest that is going to someone, somewhere.  Granted, with fractional reserve lending, the rate is net lower for each dollar created, but its there.

What will make this all fall apart isn't QE.  Its enforcing law, and treating currency (QE or not) with respect. Currency can't be created with zero limitations into thin air.  Money must be created with true value of work behind it.    For example, if you photo-copy money and spend it, the fraud is you did not contribute to society to EARN the cash.  In effect, your "promise note of work" is fraudulent.

If currency is printed and doled out without work behind it, the new dollars are in fact fraudulent, and will devalue faith in the USD over time.

In closing, the consequences of actions taken by Bernanke and others will unfortunately lead to hardships for all of us, as there is nothing for free in life.  The fraud running rampant will cause an effect.   Bernanke needs to take not just the good, but the bad that he encourages through the Fed.   And in 2013, when I think things will start to get hairy, I don't think you will be seeing Hero magazines of Ben.

My friend John says, when the market hits a top or bottom, no bell rings.  Today Bernanke is claimed to be  a hero while at the same time, market volatility index the "VIX" is at a 4+ year low, with stocks at a 4-year high (SPX 1400).   VIXY may be a buy here at $39.48.  That is as close as a bell as I can hear.

This Week in Charts

I said enough on Thursday's post titled "Market thoughts month to years ahead".

One thing I realized since then is the view is too USA centric. This time around the problems will come from Europe and other western countries. This will make the events and effects much different than 2008 since America won't be leader of problems.

And as such, the shape, form, and timeframe makes me very unprepared to make any good thoughts on when this starts. Tomorrow? Really who could know with such limited information.

Anyway, for this week, not panicking Monday was good, buying Rare earths was great. Selling my GLD, the jury is still out.

To the charts!

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Panic Day - USA Downgrade

The market cover story for the panic today is a downgrade of US treasuries by Standard and Poors to AA+, a major milestone along the road the US is on. While this is a significant event, one that I have feared since 2006, it isn't unexpected.

Spending at the deficit rate the US has is hardly surprising that the US debt machine is going to be questioned. With that said, who cares the US enjoys being best of the worst, and there is nothing else big enough to turn to. This IS a step today that deserves entry into my series of "Financial Ground Zero" events. But I don't think it is time to panic.

The day the news tells you to panic, and buy gold, should be the day to NOT panic and NOT buy gold. The day to PANIC was the last 6 months or so of me hemming and hawing that this entire market rise is bullshit. Now is too late to panic.

DO NOT RUN INTO THE LIGHT! It is a trap. :)

I am not stating sell all gold holdings, but the day that gold spikes is hardly the day to buy, it is a day to sell. I am selling portions of my GLD, SLV, and other holdings TODAY. I am keeping my gold miner stocks, AVL, in hopes they recover nicely if the market does too. Matter of fact, I am buying a bit of AVL today, but that isn't for the nervous types. AVL is below 4 bucks today, much lower than it's high near 12. Update: Also covering many shorts, 50% or more.

My two cent advice is lighten up on gold TODAY, buy stocks you have loved to have had purchased before, but now are cheap, and keep a decent portion in cash for the rest of the week.

All actions today may be wrong. Buying gold, selling gold, buying or selling stocks. But the smart player does not run with the masses, it runs against it. Balance that thought with resisting going full steam in front of the train, more prudent to edge out there, get a toe hold.

This actually could be the beginning of the worst fear I have had since 2006, an assault on US economic basis and loss of faith. But I can't bring myself to believe it has started already.

With that said, the market could easily go down a bit more. Just I am not sure what "worse" news is out there after the US Treasury has been downgraded. My assumption is an avalanche of following downgrades by others are to come this week, so I can't see the market doing a stellar rally into it.

In the end, trade what you think is best, look around, my opinion is my own, and should not be seen as advice for what you should do, see the link on the right for disclaimer.

Good luck!

This Week in Charts

Day late dollar short. I am still very busy with work, but will try to keep up the chart thing.

Big changes recently. Congress agreed to not increase spending. They call it cuts. I call it BS. Granted, it may be a step in the right direction. But I suspect this agreement won't have teeth and washington will revert to it's old ways.

Time will tell.

The republicans want to stop spending NOT because it's wasteful. Far from it! The republicans have run up more government debt than democrats hands down until Obama came along.

They want to choke the economy - just enough - to do a nice pile on Obama next year.
While I do think cutting spending in military and other areas of waste. I fear, and expect the FIRST thing to get cut is the poorest of the poor, weakest of the weak programs.

That is very unfortunate, for thats probably the ONLY services the government should have aside from minimal defense spending!

Oh well, back to the charts. I don't like what I see, and I am getting nervous. I think I'll be hitting out of positions tomorrow, atleast lighten up. I am torn on Gold, maybe parabolic rally time.

Surprisingly, Bond rates are going down, not up. And I do expect the dollar to firm up, possibly for the next year! My friend John Chinnock has been saying that forever.....I think we may finally be there.

Good luck, to the charts!

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

This Week in Charts

Well, that was some summer rally!
It went much faster than I thought. I am now questioning if this market can stay positive through August. Such a violent upturn is bound to be punished.
But I'll reserve for a down move below SPX 1260 to call this market a down trend.

We may correct, and rally right back, we'll see.
But the US Treasury interest rates may be telling us something.

To the charts!

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Federal Reserve Bank Speaks, Dollar tanks

Well, its time for the USD to head into a crisis, and I expect us to now head to break all time lows. The only question is how far down this goes.

If your 100% in cash, you have decided that the crisis will evaporate quickly, and USD will return to highs last year.

If your 100% in gold, you are expecting an all out USD collapse.

I am in the gold camp for the short term, but once break all time lows, it may get interesting. We could have an accelerated USD decline before USD finds strength. But it is possible, although not probable, that the USD headed for all out collapse.

A great blog post that explains why the USD will firm up is available by clicking here.

Click to watch Ben Bernankes speech, its a waste of time to watch. He talks in ridiculous circles and lies. The truth is the market reaction of USD, charts below. And we may finally get 30 year bond rates breaking up, not down, breaking the 25 year downtrend in rates.

I am trying to maintain optimistic USD will bottom and rise, but positioned to protect what savings I have in natural resources if I am wrong.

Hang on, next few weeks will be interesting.

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

This Week in Charts

Day late, dollar short......

Pretty much the only thing to watch is the US Dollar valuation and US long term interest rates. These two items are credited for the primary reason for stock valuations. Why? Because US corporations are international, and when money returns from other countries, since the USD is lower, it "appears" to be companies getting higher revenue on flat (or lower) sales.

This game works until natural resource costs start squeezing profits....and that is where we are today. I think its a "safe" bet to go fully long the market until USD breaks the 2008 and makes all time lows.
Previous post, USD breaking 2009 low.

Until the pattern below breaks, its natural resources up, up, up, and silver is going exponential.

To the charts!

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Mohamed El-Erian : QE3 would be a very bad idea

Mohamed El-Erian is CEO and CIO of PIMPCO, one of the largest global bond fund managers.

Great video to watch. Second Video is El-Erian talking about Japan

GREAT Quote "The three major currencies all have issues. It's like picking which dirty shirt to wear, you pick your cleanest dirty shirt".

The second video is long, but WELL WORTH the watch!

US Long Term Year Bond Rates

The USD long term bond rates are keeping within the last 25 year range....barely.

Any breakout of this is the canary in the coal mine that it's time for the USD to experience significant devaluation.

Unfortunately, the Federal Reserve Bank is buying huge amounts of US bonds, altering the actual interest rate curve, so it is possible we have already crossed this historical line, and the USD is about to really go down.

For now, at face value, rates are under control, with manipulation.

From WebSufinMurfs FinancialBlog2