The 50 DMA for the ten year yield is at 46.95 and the drop below created some overnight buying in stock futures after what appeared to be a big gap down from the MSFT news. But the core rate of inflation is rising, even if it is modestly. Couple that with the huge housing slowdown and we could see talks of stagflation re-appear. Keep in mind that energy has risen since the government did this report, adding some mild inflationary pressures. Watch oil and the 58 level. A move above might be welcome news to energy stocks, but not for the overall health of the economy. This is not the 90's, with fast growth, no inflation and crude below 30. But it doesn't matter if the market is delusional, the reality is that it does not have any alternative for investments and all that liquidity (sick of hearing that word)needs to go somewhere. Eventually, the house of cards falls, but not until everyone is fully invested, including your local pizza delivery man.
On the liquidity note, the YEN keeps rising. All those carry trade players are watching nervously as the billions they borrowed at low BOJ rates could loose leverage.
Oil reversed and is now heading higher as I type. This gave NQ an immediate drop.
On the liquidity note, the YEN keeps rising. All those carry trade players are watching nervously as the billions they borrowed at low BOJ rates could loose leverage.
Oil reversed and is now heading higher as I type. This gave NQ an immediate drop.
This entry was posted
on Friday, February 16, 2007 at 2/16/2007 09:01:00 AM.
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