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Yesterday was an interesting day to say the least.
The major indices gapped higher at the open after Congress and the
president reached a compromise that would allow an extension of tax cuts
and jobless benefits. And while I contend this was the right move, it’s
hard to see it as a major catalyst for stock prices.
Sure enough, stocks sold off steadily most of the
day. And the S&P 500 closed slightly below important
support/resistance at 1,225.
A story by Robert Lenzner in Forbes Magazine today outlined the potential
for silver to go as high as $50 an ounce in the near future.
With silver on the march from year to date lows of just over $15 an ounce
all the way up to recent highs of over $30 an ounce, it’s been one of the
best performing asset classes of the past year – and even the past
Ever since the Gulf of
Mexico oil spill, BP has been very quiet
about where it is drilling for oil. But the announcement that BP is
raising cash by selling its stake Pan American Energy for $7 billion
means that the damaged company is ready to start developing new oil
This time, however, BP will not be drilling in
deepwater. Instead, BP plans to produce 60,000 barrels a day from its
partnership in a land-based Canadian oil field.
New technology has led to a renaissance of North
American oil production. One such oil rich area stretches from
North Dakota and
Known as the Williston Basin, this geological formation
includes the Bakken Oil Pool, which has at least 5 billion barrels of
Irish debt problems are sending shockwaves through the rest of Europe
Yields on Italian bonds jumped nearly 0.25% today alone even as Ireland’s
bailout barely had time to shore up debt woes there.
According to UK newspaper The Telegraph, “Italy’s public debt is
over 2 trillion euros, the world’s third-largest after the U.S. and Japan.”
The Bank of Ireland is about to have a new majority shareholder. Ireland’s
government is expected to raise its stake in the Bank of Ireland from 36%
to something constituting a majority.
The Irish government is also expected to raise its stake in Allied Irish
Bank to, potentially, 99%.
If this sounds like Ireland is taking a page from the U.S. bank bailout
strategy you’re right. When you’re facing the potential of a run on the
banking system, the government is essentially the last entity that can to
step in and provide a backstop.
The good vibes from the GM IPO and the bailout
potential for Ireland took the S&P 500 back above support/resistance at 1,192.
We’ll see how long the good vibes last.
Despite yesterday’s strong move, the stock market
still feels “heavy” to me. That’s not to say I think a big decline is
imminent. But the way higher is going to be a slow grind, unless we get
some data to sway the mood.
I want to start this week by returning to my
comments from Friday. You’ll recall I discussed a few events that might
sap the bullish momentum from this rally and send stock prices lower. I
mentioned inflation, oil prices and debt at the state level as potential
I’m sure we could come up with a few other bearish
stories to keep an eye on. But the point is, while we should always be
aware of threats to prevailing market sentiment, it is not time to get
positioned for them.
$1,390 an ounce, gold prices are at an all time. Silver is at a 30-year
high. Agricultural commodities like fertilizer are also moving toward new
Economists are warning that these commodities could continue to move
higher in price for several months. And the stocks of companies selling
these commodities have been surging in the past few trading sessions.
Gold prices rose $45 an ounce today as investors flocked to the ultimate
store of value after Fed Chief Ben Bernanke renewed his attack on the U.S.
dollar with another round of quantitative easing.
Called QE2, the Fed will spend as much as $900 billion to buy U.S. Treasury
bonds as a way to keep the dollar weak and boost corporate profits.
According to a recent report by the United Nations Food and Agriculture
Organization, the world will require a 70% increase in food production in
the coming years.
In order to grow food production fast enough to match population growth,
agriculture markets will require an average of $209 billion in additional