Thursday, March 24, 2011

Extra Radiation Must Be Bullish For Stocks

All manner of radioactive isotopes continue to leak out of all six nuclear reactors at the Fukushima Daiichi plant on the Eastern coast of Japan. Radiation has been detected in sea water, fresh water, in the air and on land. Here's a nice summary of the effects a few of these "heavy" elements on human health.

Half a world away, Libya is being bombed to smithereens.

The coalition doing the bombing is falling apart.

New and existing homes sales are at 30 year lows.

New unemployment claims came in at 382,000, which is 5,000 fewer than the week before. Funny thing about those new unemployment claims, other than the fact that they're fairly benign numbers, is that when the economy isn't creating jobs and we're still stuck in a depression, people just hang on to the jobs they have. Businesses can only let go of so many people, so the natural tendency is for fewer and fewer people to quit, be fired or laid off. Thus, numbers like we've been getting the past few weeks only indicate that there are fewer people collecting benefits, not that new jobs are actually being created.

New jobs! You're such a kidder.

Durable orders for February were down 0.9%. The expectation was for a gain of 1.1%. Ooopsie!

All good, according to Wall Street. Party on.

I am the walrus.


Dow 12,170.56, +84.54 (0.70%)
NASDAQ 2,736.42, +38.12 (1.41%)
S&P 500 1,309.66, +12.12 (0.93%)
NYSE Composite 8,311.61, +62.78 (0.76%)

As expected advancing issues exceeded decliners, 4273-2196. Global economic conditions are so good, in fact, that there were 110 new highs on the NASDAQ and just 22 new lows. On the NYSE, 135 companies set new highs while only 13 hit new lows. Volume actually picked up a bit after two days of sleep-walking. Don't want to miss the rally, for Pete's sake.

NASDAQ Volume 1,901,250,250
NYSE Volume 4,358,651,500

Meanwhile, oil traded on the NYMEX, that light, sweet stuff called West Texas Intermediate, backed off a whole 15 cents a barrel, to $105.60. The new normal for a gallon of gas in the USA is now $3.55, according to AAA.

According to our sources at Kitco, gold is currently down $8.10, at $1430.50 per ounce, but that price does not reflect that the yellow money made a new all-time high today of $1449.10. Silver is being quoted at $37.19, down 23 cents. But silver also made a move to a fresh 31-year-high, slightly above $38 per ounce.

So, who's right? Normally, gold and silver only gain in times of undue global stress, as a store of value and a hedge against collapsing currencies and/or inflation risk.

Stocks go up in times of robust economic activity, normally, or whenever the Fed pumps enormous amounts of fresh capital into markets, as they've been doing for the better part of the past 2 1/2 years.

The dollar index fell .183, to 75.69, a horrifically low figure, indicating the US is not the safe haven it used to be in which to park money.

There's your answer. If the dollar index continues to fall, reaching unprecedented lows, which it is currently approaching, US stocks, denominated in dollars, have to gain just to keep up. Commodities may swing either way, but the precious metals and oil should rise as the dollar weakens, so both stock players and gold bugs are right to keep pushing prices higher. Only one of them will be the eventual winner, however, and, while we are pretty sure which that will be, we're not telling.

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