Financial Sense Blog

The “Group of Seven” central bankers, who control the money spigots in 2/3’s of the world’s economy, huddled with their colleagues from China and Russia behind closed doors in Basel, Switzerland this week, haunted by the “Crude Oil Vigilantes,” who threaten to unravel G-7 schemes to rescue troubled global banks.

While we believe in a stock market rally mid 2008 because of fiscal and monetary stimulus, we don't believe it will be the start of a new bull market as many predict.

The unfolding story of the US Dollar's daze and its counter intuitive reaction to Wednesday's Fed rate cut combined with its linkage to multiple spread trading and carry trade strategies make this our obvious starting point to explain some of the markets recent mysteries. That the interests of so many investors are linked to DX, whether they know it or not, has been stated here on many occasions. That the majority of investors continue to ignore this linkage is to their detriment.

Cycles are really just another way of looking at various trends of various degrees. Also, cycles in the market are really no different than many other cycles in nature. As an example, sometimes we have an early spring and sometimes it’s late. Sometimes a particular bird’s migration is earlier than normal and sometimes it can be a bit later than normal.

After watching the price of silver soar to as high as $15/ounce in May 2006, Warren Buffett, the “Oracle of Omaha,” offered some sagely words of wisdom. “What the wise man does at the beginning, the fool does at the end.

The numbers thrown around during the ongoing credit crisis are so large; they effectively lose their meaning to most of us. I would like to put the millions, billions and trillions in some perspective by referring back to an article I wrote years ago (The Debt Bomb) about our growing debt problems.

As America goes; so goes the world!