Financial Sense Blog

It seems that most everyone is again focused on commodities and I continue to hear talk of $5.00 per gallon gasoline. I obviously can’t deny the fact that commodities have been in an uptrend. In fact, there is a longer-term cycle that averages some 3-years in the CRB Index.

The title above is a phrase coined by John Mauldin to describe Japan's financial condition, a subject upon which he expands further in his new book, written with Jonathan Tepper, Endgame: The End of the Debt SuperCycle and How It Changes Everything.

This 240 page beast has something for everyone to hate. More than 100 recommendations on ways that expenses could be cut, or revenues increased.

Financial markets are not immune to Newton’s First Law. The short-term “motion” in stocks is to the downside.

Slowing economic growth is usually a positive for bonds. Bonds are bought as a safe haven when global stock markets are in corrections. My technical indicators have reversed from a timely sell signal on bonds last November to a buy signal. Bill Gross, founder and manager of PIMCO’s giant Total Return fund, said this week that he is negative on U.S. debt and has dumped all U.S. treasury bonds from his fund. And even that may be a buy signal.

A curious exchange took place in U.S. Senate hearings on Thursday. The senator from Michigan, Carl M. Levin, expressed surprise at an answer given by the Director of National Intelligence.

Many readers might remember that exactly two years ago the S&P 500 tagged the infamous 666 price level before putting on a monster 2 year rally that saw it surge over 100% to the February 2011 highs.

For some time I've been saying that the economy is in the “eye of the storm” and that when it emerged, the weather would be far rougher than in 2008. The trillions of currency units created since the Greater Depression began in 2007 have papered over the situation, but only temporarily.

While a big drop in stocks and news of rubber bullets and stun-grenades being used on protestors in Qatif, Saudi Arabia garnered the attention of the news media and investors on Thursday, the bigger investment story is the fact that PIMCO, the world’s largest manager of bond funds has “dumped” their U.S. bond holdings in their flagship Total Return Fund. Leading us wondering if the public will ever catch on to what is happening here.

Europe has been pretty quiet lately. But apparently that was an illusion. The Eurozone’s slide down the slippery slope continues, but because the current stage involves colorless bureaucrats debating the terms of debt swaps rather than street riots and air strikes, it has been overshadowed by the chaos in the Middle East.