Financial Sense Blog

There are three possible scenarios as we continue to consolidate sideways since February: flat correction, inverse head & shoulder continuation formation, or a double top. There are a lot of indicators that suggest this market’s long-term trend is still bullish with a higher advance decline line, more new highs versus new lows, and a high percentage of stocks above their respective long-term moving averages.

Greek and Portuguese Euro-based sovereign debt yields hit new highs today with the Greek 10-Year sovereign bond yield topping 13% for the first time in the history of the Euro and the Portuguese yield.

In Europe, the authorities of the European Central Bank incorporate food and energy into their inflation measures. In the United States we do not; we use something called core inflation. We determine that food and energy prices are the result of shocks that are beyond the control of the Federal Reserve and, therefore, are not reflective of central bank policy. The European Central Bank sees it quite differently.

Every 10 percent increase in global food prices equates to a 100 percent increase in anti-government protests, according to a recent report from the International Monetary Fund. Looking at recent increases in foodstuff commodities — up a total of 45 percent since the arrival of QE2 last year — it’s no wonder there are revolutions, civil wars and riots breaking out across the globe. According to the IMF, a 45-percent increase in foodstuffs should quadruple the levels of unrest, and that seems to be precisely what’s happening.

Today's release of the Producer Price Index (PPI) for March reinforces the pattern of higher inflation. The year-over-year core producer price increase was the largest since August 2009:

Correspondent D.S., with one daughter in college and other children nearing graduation from high school, asks: what are the credible alternatives to $100,000 in debt for college? D.S. mentioned the relative paucity of apprenticeships in the U.S., and this is certainly a critical "missing factor" in credible alternatives.

Weak corporate tax collections in the first quarter and through April 11 could mean that many quarterly earnings reports may surprise the market by failing to meet analysts’ inflated expectations. Either corporate profits are falling sharply or else corporations have suddenly become much savvier about offshoring income and avoiding taxes.

The debate over the very nature of our monetary system continues to gain traction. As it does, people will discover two terms that are often used interchangeably to describe a constitutional alternative proposed to compete with our current central bank/fiat monetary system. This article highlights the difference between those terms.

The slogan "the trend is your friend" was created for a reason. People tend to agree more often than disagree with their friends. Aligning yourself with the long term trend means you are choosing to agree with the wisdom of the market. Good friends typically help each other out too, and when you trade with the trend you let the market help you choose the correct direction to align your long term investments with.

Are there any dollar bulls left? Inflationists across the web are crying ‘victory’ as the dollar sinks and certain asset prices (especially oil prices, food prices, and the gold price) mushroom higher. To the level headed, you should exercise extreme caution against assumed fixed correlations like “weak dollar” means “asset price increases.” Correlations can quickly change.