Good morning traders - after a couple of hours of reviewing some research reports, just a few comments/questions swirling around.

  • U.S. 10-year Treasury yields are up about 120 basis points from their lows.  Conventional wisdom suggests that a rise in rates is bad for equities.  However,  the S&P 500 is up 3% during that same period and the Russell 2000 is up 9%.
  • While gold has been a real puzzler this year, i.e. the sharp decline depsite almost certain future inflation, price action always trumps forecasts.  Nonetheless, maybe there is still more downside to come.  "Are financially strapped/politically troubled emerging markets selling gold?  Turkey sold over 40 tonnes last month.  Portugal is not an EM, but it does hold a lot of gold and it is financially challenged.  If an EM bust occurs, will they sell even more gold and gold ETFs to re-liquefy their bank systems"  Source:  TIS
  • China:  a sobering statistic that cuts across many levels:  China shows signs of financial stress and slowing growth rates.  Suicide rates in rural China are soaring, suggesting the social fabric is also starting to show signs of stress.
While these questions may not impact what we do in terms of trades today, tomorrow or even next week - it is always prudent to look at the big picture and ask yourself about different scenarios and the implications if they play out.