Tuesday, August 20, 2013

Stocks Slammed Again; 10-Year at 2.90%; Egypt Coming Apart

Make it four down days in a row and nine of the last 11 for the Dow Industrials, since making an all-time closing high of 15,658.36 on August 2nd, slipping today to the closest point to 15,000 since July 5th.

If one needs a catalyst or cause, it's Egypt. A former ally, the most populous Muslim nation in the Middle East, now up in flames and our government backing the wrong side. Tragic, complex and horrifying, the tableau playing out is enough to shatter the confidence of most of the globe.

Beyond the obvious implications of large nations devolving into anarchy and chaos, there are so many other issues - financial and political - roiling the markets, it is impossible to take all of them accurately into account. Suffice to say, it's a mess out there and politicians are about to make it messier, with a new round of budget battles and debt ceiling debate set to get underway in the nation's capitol.

On the global horizon, India is having a currency crisis, the Rupee falling to historic lows against the dollar as the Indian government attempts to limit and/or tax individual holdings of gold. It certainly will not work. India has the highest gold-ownership per capita on the planet.

Naturally, our very own Federal Reserve will not be outdone by foreign rivals. The Fed continues to tinker and experiment with the currency, becoming all-too-powerful a force in all markets, from commodities to stocks to treasuries.

Speaking of treasuries, the benchmark 10-year note touched 2.90% today, a 130-basis-point rise since May. Literally, nothing will destroy the economy better than uncontrollably-rising interest rates, and we have them across the curve.

It has long been said on this blog and elsewhere that these experimental attempts to revive a dead, decaying, US and global economy will not end well. The stark reality is that the global economy imploded in 2008. All the QE, ZIRP and presumptive actions by the Fed and other central banks is nothing but window dressing, the model in the storefront being a naked - and likely capitalist - pig.

If the carnage since 2008 has not been enough for this country to bear, imagine the pain as it's about to get worse, a lot worse.

Dow 15,010.74, -70.73 (0.47%)
NASDAQ 3,589.09, -13.69 (0.38%)
S&P 500 1,646.06, -9.77 (0.59%)
NYSE Composite 9,385.89, -79.70 (0.84%)
NASDAQ Volume 1,402,886,250
NYSE Volume 3,236,012,750
Combined NYSE & NASDAQ Advance - Decline: 1566-5077
Combined NYSE & NASDAQ New highs - New lows: 64-532 (how quickly it has turned!)
WTI crude oil: 107.10, -0.36
Gold: 1,365.70, -5.30
Silver: 23.17, -0.156

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