Less Bad Is The New Good & Greed Replaces Fear...
ritholtz.com
ADP? Really?
By Barry Ritholtz - May 6th, 2009, 9:48AM
Markets leap up from the open on a better than expected ADP Payroll report.
Given the history of the ADP report’s failure to correlate very well with its bogey (BLS’ Non-Farm Payroll), the reaction is revealing of sentiment.
Less bad is the new good, and as Doug Kass noted yesterday, greed has now replaced fear.
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Spot on.
Less Bad Is The New Good and Those Running OPM/Your Money
Have Now Morphed From Fear To Greed.
...and that's not a good thing.
Also...
Those who have been smacking down gold - have NOT went
quietly into the night.
Think like a bankster & trade 'em like a thief in the night.
Ask yourself who's buying today - and why?
You saw what happened yesterday... late day smackdown.
This morning's gold stock rally is based on the market rally
communicating late 2009 economic recovery and resulting
inflationary implications.
This rally is based on "less bad - being the new good"...
ie: false data. So, don't be afraid of taking profits into
rallies when the the rally is based on false data and the
buyers are buying for the wrong reasons.
Inflation will be a "primary driver" for gold, but not here,
and not now.
Inflation is a "secondary" driver for gold right now.
The real underlying present strength for gold & gold stocks
is currency related. It's the initial stages or global
debasement.
It's all the quantitative easing, it's negative real rates,
and it's the globally coordinated stimulus packages.
We're in a "managed" trading range here. The market is being
churned to accumulate gold. You want to be selling when the
masses come in to buy (for all the wrong reasons) and you want
to be buying 'em back - when the smack downs come.
The mother of all inflation trades will come, when central
banks are forced to print money to buy their own bonds,
because there are no other buyers.
That's when you'll see the US Dollar collapse.
Today, the dollar is up.
While we are seeing some monetization of the debt and the
US Fed stepping in on the long end to cap mortgage rates,
there are still strong buyers of US Treasuries.
One day, there won't be. But that day is not today.
The shadow banking system has been vaporized, and banks are
NOT lending. The velocity of money has slowed dramatically,
and while currency is being printed and debased, we are still
experiencing massive debt liquidation based in US Dollars,
which is mechanically propping up the US Dollar.
When real economic recovery finally arrives, and/or when
central banks are forced to begin buying their own bonds
because no one else is... then inflation will once again
be the primary driver.
While the lid on the bottle holding the inflation genie captive
has been opened, the genie is not large and in charge - yet.
He will be one day, and that's when the unstoppable parabolic
move will begin.
Right now, gold is still a negative correlation trade to the
broad market, a haven from geopolitical risk & coming political
oppression, and the initial globally coordinated reflation
effort, QE, and initial stages of currency debasement by
central banks.
I'll get some charts up later tonight.
Mo Later,
SOTB |
