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Friday, September 21, 2012 – It’s Not Whether You’re Right or Wrong

It’s Not Whether You’re Right or Wrong by Sinclair Noe DOW – 17 = 13,579 SPX – 0.11 = 1460NAS + 4 = 317910 YR YLD – .02 = 1.76%OIL + .47 = 92.89GOLD + 4.50 = 1774.00SILV – .12 = 34.62PLAT + 11.00 = 1641.00 Let’s be very clear on what has happened over the past week or so. You already know the Fed announced QE3 to infinity or 5.5% unemployment plan (whichever comes first). What does that really mean? It is probably a very, very bullish event for stocks and commodities. We talked about commodities and equities moving higher in anticipation, and we saw silver move up about 33% over the past month; gold up 14%; the Dow Industrials picked up almost 600 points; the S&P 500 up about 60. Since March 2009, Gold is up 97%, silver is up 162%, oil is up 122%, and the Continuous Commodity Index (CCI) is up 55%. And then we’ve seen some consolidation over the past week, exactly as we anticipated, because this was the pattern that we saw after previous QE announcements, but you’ve got to suspect QE3 means the Fed has flipped the switch to risk-on. Maybe you also remember that back in the Spring I brought up the old adage about the best and worst 6 months in the market; you remember, “Sell in May and stay sway.” Well, the S&P 500 is up about 50 points from May 1st. If you missed that, don’t feel bad because …

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Wednesday, September 19, 2012 – Distortions and Unintended Consequences

Distortions and Unintended Consequences by Sinclair Noe DOW + 13 = 13, 577SPX + 1 = 1461NAS + 4 = 318210 YR YLD – .03 = 1.78%OIL – 3.31 = 91.98GOLD – 1.40 = 1770.70SILV – .21 = 34.67PLAT + 12.00 = 1647.00 It was no surprise last week when the Fed announced a new quantitative easing (QE) program. They had telegraphed the new QE. The Fed will purchase $40 billion of agency and mortgage-backed securities (MBS) per month until the labor market improves. This amounts to about half a trillion dollars per year, give or take a few billion, and there is no specific limit on how long the program will last. Toss in $85 billion a month in the still-in-effect Operation Twist and by 2015, the Fed balance sheet would grow to $4 trillion, from under $3 trillion today. And the European Central Bank is on the path of its own quantitative easing via open-end bond buying like our own Federal Reserve. Some Euro countries are in a flat out depression and even the healthy ones are looking at economic contraction at least through the end of the year, with GDP forecast in the range of negative -0.6% to -0.2%. Now, the Bank of Japan has joined the party, announcing their own bond buying program, hoping to avoid the appearance of a strong currency, or maybe to stimulate economic growth. I don’t know anymore. Pick a reason that suits you. I suspect, the central bankers are doing a …

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