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Author Topic: Market Commentary - Feb 01, 2011  (Read 843 times)
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tamo42
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« on: 2011 Feb 01, 09:44:28 pm »



Today's action was all about those magical round numbers. The Dow broke through 12,000 and the S&P 500 broke through 1,300. More importantly, both of these indices closed above their respective key levels. While all this was going on, protests in Egypt continued, the industrial cost numbers came out, and car sales were reported. The take-aways are that the internet revolution seems to be successful, manufacturers are paying higher prices (soon to come to a Wal-Mart near you), and although a bunch of cars were sold the car makers have increased supply tremendously.

Let's look at today's numbers:

US Dollar ETFGold ETFSilverDow 30S&P 500
22.14-0.98%  1308.00+0.72%  28.43+1.79%  12,040.16+1.25%  1,307.59+1.67%  

In addition to the happy numbers on the Dow and the S&P, the dollar continued its fall from panic buying last week. Gold actually went the opposite way today, which we used to consider normal.

Silver has continued its bounce off support at 26, and also is coming out of backwardation. Physical silver supply seems to be diverging as the US Mint reported that January silver eagle sales have broken all monthly records. The people that are awake to the inflation coming down the pipe (from things like higher than expected manufacturing costs) are grabbing as much silver as they can. The spot prices on the world paper markets are not fully reflecting this increased demand.

Happy trading!
« Last Edit: 2011 Feb 02, 10:43:49 am by tamo42 » Logged

Neal McSpadden
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badon
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« Reply #1 on: 2011 Feb 02, 10:03:19 am »

The take-aways are that the internet revolution seems to be successful, manufacturers are paying higher prices (soon to come to a Wal-Mart near you), and although a bunch of cars were sold the car makers have increased supply tremendously.

Could you explain that? I'm not sure what you're talking about there. Also, linking the word "backwardation" to your article about it would be handy for new readers. Thanks!
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« Reply #2 on: 2011 Feb 02, 10:57:37 am »

What I meant was this:

the internet revolution seems to be successful - Protests continue in Egypt, the military has refused to fire on the people, and the US foreign policy people have pretty much abandoned Mubarak. It looks like he's just about finished, one way or another. At this point it's just a waiting game to see how it plays out. Additionally, other Arab "presidents" have decided to not run for "reelection."

manufacturers are paying higher prices (soon to come to a Wal-Mart near you) - the ISM report came out, and it is supposed to measure manufacturing activity in the US. The results were high, higher than expected. My interpretation of this is that the price increases we have seen in base commodities has started to trickle through to the manufacturing sector. Next stop is wholesalers and then retailers. Be prepared for either retail margins (and thus profitability) getting reduced, or retail prices going up. This is what most people refer to as inflation.

and although a bunch of cars were sold the car makers have increased supply tremendously - The January report for auto sales was pretty good compared to recent months. The sticking point is that auto manufacturers (GM in particular) has added a huge amount of supply to the car dealers. GM sold 178,896 cars in January. So far so good. But then they put 510,000 more cars on the dealer lots. It's an odd thing to do. Clearly GM still has plenty of excess capacity. Additionally, when you combine the car sales numbers with the consumer loans information, you can see that most of the car sales are of the 'little/no money down' type. Essentially we have more people buying cars who can't afford them. Both the buyers and sellers of these cars with loans are speculating that the recovery is here, and it's happy days ahead. I remain skeptical Smiley.
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« Reply #3 on: 2011 Feb 02, 11:16:29 am »

Oh yes, skeptical indeed. It sounds like the car makers got some bailout money, and they're spending it. I expect cars to become very cheap then, if all of this plays out like it looks like it's going to, especially for used cars. People won't be able to sell a high-quality used car when you can get a new one for closer and closer to the same price. That means prices will drop on the year-old, barely driven cars.

I don't own a car because it's yet another one of those things that's under government control, and ruthlessly exploited. It'll give me some perverse satisfaction to see the masses come to the same conclusions I have Smiley
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« Reply #4 on: 2011 Feb 02, 11:56:07 am »

Heh, I'll have to disagree with you there. My car makes me money by enabling quick and easy travel to widely different places to make deals.
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« Reply #5 on: 2011 Feb 02, 12:23:28 pm »

This is why countries that aren't designed around dependence on cars will easily surpass the USA in economic terms. Instead of sprawling out across the continent, they invest in the cities, and especially public transportation within and between them. They can do the same business, without the car = $$$.
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If families are a problem for the system, then we must reject the system, not the families.
Founder of the Coin Compendium (forum, blogs, calendar, images, donate, contribute).
LBC makes you rich, with a free ebay gift certificate awarded every month!
The Coin Compendium and the china-mint.info forum, censure, disclosure.
Do not PM questions. Answers should be publicly available.
Backup is not enough. Protect your data with MultiPar.
Writer of LBC Chinese coin investment articles (list).
About me: User:Badon - MediaWiki.org
Badon effect: type 1 to 8, type 9.
I type faster on a TypeMatrix.
Use my work. Give credit.
Coin, medal, whatever!
Coin storage advice.
FreeArc is amazing.
User contributions for Badon - Coin Compendium
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