We saw a very
large move in the markets today where investors are betting heavily on inflation
– at least that’s the “surface” appearance.
Gold and oil were up
strongly. The US Dollar Index had a good-sized drop. But what are the other
numbers telling us?
First, notice from the data below how the 10-year and
30-year Treasury yields went down today! This means that investors were willing
to make less interest when purchasing them. You normally look for yields to go
up if the stock market has a healthy gain – since investors typically move out
of the “safe” Treasuries and into stocks.
We also see that the 2-yr vs.
10-yr and 2-yr vs. 30-yr Treasury spreads are beginning to “blow out” some
more. This means that investors are running to the 2-yr Treasury notes for
“safety”, but are leery of the longer 10-yr and 30-yr securities. In other
words, investors truly want to get as close to liquid cash as
possible.
We also see where the “Volatility indicator” (VIX) barely
dropped today. This indicator should have dropped significantly on a major
rally like we saw today.
Lastly, we see where the Euro has strengthened
in a fairly major way against other currencies in the last few days. This is
complete currency manipulation, since things have only gotten worse in the
European Union. This can be seen be investigating the “insurance premiums” that
investors must make against Greek CDS’s (Credit Default Swaps). This insurance
is at record high rates.
Many people were fearful of the news today that
China has stopped buying our debt for all intents and purposes. This puts a big
hyper-inflationary scare in the air. Actually, all debt issued at Treasury
auctions is bought with existing US dollars. There is no creation of new
dollars that takes place. To say that China’s refusal to buy our debt is
hyper-inflationary would be very wrong.
All of the underlying data leads
one to only guess what games are afoot. I see a populace in our nation that
truly wants to believe we have turned the corner. I also see a media that is
propagandizing with false economic impressions.
The truth is that Federal
government debt spending is the only thing contributing to the false assumption
that our nation is finding its way out of the woods. It solves nothing, and
makes the longer term prospects very dismal. There are two things that need to
happen in order to step away from the economic edge:
1) Insolvent
institutions need to be allowed to fail. Yes, many people will get hurt
financially, but everyone is going to get hurt much worse if this doesn’t
happen.
2) We need to dissolve our debt-based money supply. If we desire
a national currency then it needs to be printed and controlled by the US
Treasury, not the Fed. The Fed should be completely abolished, razed to the
ground, and treated as the toxic-waste site that it
is. ______________________________________________________
Watch for
these indexes to drop:
Chinese Shanghai Composite Index: 3,018.13 (change
of 7.62% from July 20, 2009 base value of
3,266.92) Shenzhen Stock Exchange Component Stock Index (SSE): 12,304.78
(change of 8.04% from July 20, 2009 base
value of
13,381.22) ________________________________________________________
Here
are today’s numbers for the economic indicator:
1) Gold = $1,117.80 2) Silver = $16.11 3) Dollar
Index = 79.64 4) Oil = $77.40 5) S&P 500 Index = 1,094.87 6)
3-month Treasury Bill yield = 0.09 7) 3-month OIS = 0.15
HEI =
33.94
(A value of under 100 indicates deflation, while over 100 indicates
inflation – as referenced to Sept. 12, 2008…the day before Lehman Brothers
collapsed)
