Half A Loaf

US markets witnessed both sides of the ledger on Monday as the Dow and NASDAQ closed marginally lower while the S&P 500 hung on to a measly 1-point-and-change gain. Following last week's roller coaster, indecision was the rule of the day, amid low volume, though typical for a summer session.

Dow 13,423.01 -1.38; NASDAQ 2,572.15 -1.39; S&P 500 1,508.97 +1.30; NYSE Composite 9,941.73 +15.66

Advancing issues lagged decliners 11-10, though some relative strength was shown in the 166 new highs as compared to 126 new lows.

Interest rates and inflation are still weighing on investment decisions. The benchmark 10-year note is yielding 5.137%, a tempting rate for conservative investors. Unfortunately, with inflation galloping along at a 3% or better rate, the 2% spread is only a hedge or a way to preserve money rather than making some.

On the heels of the bond momentum comes a healthy gain in gold and silver. Both were up on the day - gold by 8.70, to finish at $659.00; silver gained 24 cents to $13.28. The metals have been stuck in a range for 14 months and are closer to the low end of their respective ranges than the high end and have not moved ahead since the spectacular bull stage of 2002-2006.

However, with bonds rising, the metals should follow, though they were likely overbought at the high ends of the 2006 rally. Thus, they also serve only as hedges, not investments unless one is willing to actively trade them through their troughs and peaks.

Oil was back up again by $1.21, closing at $65.97. This price is still close to catastrophic for the US and world economy and not enough is being done by either the financial world, environmentalists or governments to force the high prices back down to more comfortable levels, say, $45-50 per barrel. The protracted expensive nature of crude and distillates has become a significant drag on growth as the most recent GDP illustrates.

The longer the oil companies and sheiks are allowed to maintain near-predatory pricing, the greater the threat to standards of living worldwide. Without relief, costs for almost everything will continue to spiral higher.

A few thoughts for tomorrow and the next day.