Friday, March 11, 2011

World Down, Americas Up, Why?; What BTFDYFI Means

The devastation form the largest ever recorded earthquake in Japan is pretty severe. Markets worldwide sold off, all of them, in uniform fashion, except for those in the Western Hemisphere.


Good question, and the only plausible response available is that the US and Western Hemisphere gains comparative advantage for any other global setbacks that aren't in our immediate physical hemisphere, though it's probably not quite that simple.

The US, Canada, Mexico and South America surely aren't isolated in any manner from Japan. Devastation there will have a negative effect to some degree on global trade. The real difference here is that US markets are not free, not liquid and prone to machinations of madmen like the one who sits as Chairman of the Federal Reserve Corporation (a Delaware corporation). The other markets - in particular the Canadian and Brazilian markets; Mexico was down sharply - are actually in our global proximity and economic sphere of influence, so it is likely that once events in Japan had been digested and recognized as not a huge problem for the US, the marketeers went to work with the zero-interest rate free money on hand and BTFD.

(Those not well-versed in the acronym world of high finance, BTFD stands for Buy The F---ing Dip. BTFDYFI stands for Buy The F---ing Dip You F---ing Idiot.)

And so it is. Stocks ended the week with nice gains on a day that millions of Japanese people have suffered tremendous personal and financial losses. It takes a really cold indifference to human suffering to buy stocks in the face of devastating circumstances. Fortunately, there were not many people doing that; volume on the major exchanges was severely thin. Only the worst of Wall Street - meaning insiders from major banks, brokerages and hedge funds - were in on the dip-buying today. Hopefully, they will be richly rewarded with losses in coming days.

Dow 12,044.09, +59.48 (0.50%)
NASDAQ 2,715.61, +14.59 (0.54%)
S&P 500 1,304.28, +9.17 (0.71%)
NYSE Composite 8,248.53, +48.46 (0.59%)

Gainers turned the tables on losers, 3861-2613. New lows out-polled new highs on the NASDAQ, 71-31, but the result was just the opposite on the NYSE, with 32 new highs and 19 new lows.

NASDAQ Volume 1,825,802,625
NYSE Volume 4,237,853,500

The day was more eventful for commodities. Crude oil on the NYMEX front futures contract fell $1.54, to $101.16, as the Middle East's "day of rage" turned out to be more a stroll through the city square than full-throated protestations. Maybe the Arabs with government grievances should hire a few of the rent-a-thugs from Wisconsin, since they are no longer needed there.

Gold and silver got a boost on rumors that a furtherance of the Fed's easy money policies were in the bag. Gold, after trading lower through the early portions of the New York session, finished with a gain of $9.30, at $1,421.80. Silver, under similar circumstances, shot up 87 cents, to $35.94. The confidence of precious metals holders and traders is extremely high and rising. while there may be occasional setbacks along the way, the only way for the metals to go is higher, probably much higher, doubling or tripling in value from here over the next three to five years, though especially silver, which underperformed gold in the 2000s, but is quickly making up for lost time.

At last, we arrive at the weekend, with the major indices suffering roughly 1% losses for the week. The trend apparently having reversed over the past few weeks, remember that it is your friend.

Enjoy the NCAA conference tournaments this weekend and get ready for some wild action on the courts and in the markets in weeks ahead.

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