January 17, 2012
As a reminder, I join with other internet users in opposing SOPA, the proposed bill giving the regulators (ie Govt) dramatic increases in the ability to control and shut down the internet. See yesterday’s post HERE for more details.
Yesterday started off wonderfully, with the US indices blasting out of the gates for 1%+ gains. Growth stocks were moving, gold was up 2%. Mainly in reaction to good numbers out of China where their market enjoy a huge rally.
However, as the day went on, the market sagged. Perhaps the world doesn’t think China is a leading indicator yet, as many likely hold the opinion that weakness in Europe and/or the US will mean weakness in China. This doesn’t factor that consumption overall in Asia is growing and at some point in the future, the world will follow the growing markets.
The large cap gold stock index was smacked due to Kinross and Newmont Mining, both of which reported higher costs. With gold stocks barely crawling back from the fall drubbing, no one was in the mood for any negatively from the sector and both stocks were subsequently sold off big.
Large cap tech was mixed (some of the biggies report today), the dividend payers (“bond replacements”) were flat and the MLP’s as measured by their index bounced off the 50 day moving average. As we discussed before, US dividend paying stocks and MLP’s got a boost last year as the rest of the market fell. I refer to them as “bond replacements” because I opined that managers preferred them to risky sovereign debt (my thesis). Both have been flat this year as growth stocks started the year off with a bang. I am watching to see if stocks generically weaken, do the bond replacements get a bid and if stocks continue to strengthen, what happens to them?
Gold is still above its 50 day moving average. It’s likely people will figure out that central banks will continue to push liquidity into the system. And eventually it will show in a big way. The large cost of living increases are not hitting the US dramatically yet, but in other countries, the cost of basic necessities is rising too fast. Central bankers don’t care though, as long as they can produce a headline number of +2% or +3% in the US and Europe, they really don’t care what people pay for food across the globe.
Below are a couple of videos to enjoy – Marc Faber discussing Europe and the global economy and TrimTabs CEO Charles Biderman on economic growth (what a view off his deck).
At the time of this writing, I or my clients own the following investments mentioned in this column: Gold
Note: this article is meant to be some helpful thoughts to share and not investment advice specific to you. Please consult your own advisor regarding investment and financial decisions. See our disclosures page