Friends
We finally got a little unwinding of the relentless fear trade today as both gold and Treasuries securities sold off and stocks rose. Gold was the story of the day falling as much as $100 per ounce at one point. Treasury yields rose as prices in Treasury bonds fell. On the other side of the trade, stocks rose 143 points on the Dow Jones Industrial Average and 15 points on the S&P 500, with the S&P closing at 1177. Notable among the gainers were the Financial and Industrial stocks which both seemed to catch a bid on a day where traders chose to look at the sunny side of the economy. It’s doubtful that today is the beginning of any new major trend, but it is a nice change of pace from the continuous drumbeat of negativity that we have endured lately.
A rise in the durable goods number was a welcome relief, although the number does reflect activity in July, and not the coma we have been in so far in August. Nevertheless, the number was better than expected and helped put some energy into unwinding the fear trade, at least for a day. Remember, we have Dr. Bernanke’s speech on Friday, and for some reason traders think he is going to deliver a QE3 moment. We think that is highly unlikely, and for that matter we think it would send a very negative message about the economy. In the meantime, the S&P 500 remains in the 1100 to 1200 range.
We are all anticipating the Fed Chairman’s speech. We’ll keep you informed.
Have a nice evening everyone.
