Financial Sense Blog

What happens when the Fed is finished with QE2? I have been letting that filter into my thinking lately as I look at the economic landscape and the data we have seen the past few weeks. Correlation is not causation, as I often say, but all we can do is look back at what happened last time and speculate about the future.

For months and months I've been warning investors that the dollar was going to come under extreme pressure sometime this year. I expected it to probably happen in the spring. Many people thought I was nuts.

Japan is being replaced on the news by events in North Africa. Few if any journalists are writing about what will soon impact the US. We share the problems with the Japanese, it is just tht no one is talking about it.

With all the volatility in the stock market and global correlation of markets during periods of crisis investors should ask why they should invest in the stock market. More than a quarter of U.S. employees (27%) said they were ‘not at all confident’ about their ability to afford a comfortable retirement with their 401(k) plans and retirement savings, the highest percentage in two decades, according to an Employee Benefit Research Institute report issued this week.

The G-7 finance ministers acted last week to halt the strengthening of the yen and dampen market volatility in the face of the twin tragedies in Japan. A key question is, why would the yen strengthen?

I’ve been thinking all week about the disaster unfolding in Japan. The level of human suffering is mind-boggling. In fact, I’ve wanted to write about it all week, but, frankly, I needed some time to compose my thoughts and allow the disaster to play out. Too many unknowns.

With all eyes clearly focused on the tragic events in Japan and the unrest/violence/burgeoning war in the Middle East/North Africa (MENA) region, investors didn’t have much time to celebrate the current bull market’s second birthday on March 10th.

Gold has been up for 5 of the last 7 weeks and silver for 7 of the last 8 weeks. One did not need technical indicators to infer a rest period was in order. Unfortunately, silver is still 1.44 times above its 200 day moving average while gold is considerably better at only 1.08 times.

Generally the picture is of a market that has corrected from overbought conditions to set the basis for a renewed rally, but there are some bearish signals which warrant attention.

Charting Inflation since 2001