Financial Sense Blog

Given the stark contrast between asset class performance before and after the implied announcement of QE2, the Fed’s statements related to quantitative easing in the coming weeks will have a significant impact on the outlook for stocks and the relative attractiveness of asset classes, market sectors, and subsectors.

These policies on face value imply severe economic distress for several years as they are implemented starting in 2011 and thus require the continuing lubricant of near zero interest rates backed up by quantitative easing aka money printing to inflate the economy (consumer and asset prices) in an attempt at offsetting public sector deflation so as to prevent a nominal double dip recession.

Gold's volatility is already growing enough, without Fudd on board! Japan, the Mid East, Ben "Dr. Pinocchio" Bernanke hundred trillion dollar OTC derivatives balance sheet marked to 2 trillion dollars of lies, $100 trillion of unfunded liabilities, and the list goes on and on. The crisis is not over. Not at all.

Risk management means sell now and then hope you are wrong. This morning we took Japan to zero weight. This is a huge step in view of the fact that the weight of Japan in global indices is 21%. We rarely go to an extreme like this.

My thoughts are with those trying to contain the nuclear reactor crisis in Japan, and with their families, who are justifiably worried about the health consequences their loved ones risk as they work long hours in hazardous and difficult conditions.

Despite the Fed recently surpassing China as the largest owner of U.S. government debt, the U.S. remains heavily reliant on foreigners to fund the government’s ongoing fiscal largess.

RHODIUM TRADING THOUGHTS is about timely and profitable trading of precious metals. We do not believe every turn in the market can be called. Our goal is that our recommendations should be profitable. Profits are the goals, not trades. Do not expect all recommendations to be profitable. No system can achieve that lofty goal. Our goal is simply to state whether conditions for a metal are favorable or not.

A few months ago, the chorus sung by the recovery cheerleaders reached a crescendo when expanding consumer credit statistics and surging US trade deficits provided them with "evidence" of an economic rebound.

Living in Chile, I experienced the February 2010 earthquake. That puppy measured 8.8 on the Richter scale at its epicenter. In Santiago, the earthquake registered about an 8.2—and I was on a 15th floor when it happened. Believe me, it was quite the experience. I wrote a first person account of the earthquake here.

It's now been over a decade since the great tech bubble burst in the year 2000, but even today technology stocks are still popular among most investors and the financial media. There are good reasons for the continued popularity of technology stocks.