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Author Topic: Rumors Rumors Everywhere  (Read 1600 times)
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tamo42
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« on: 2011 Feb 24, 02:40:59 pm »

The gossips are active today, and the markets are responding like they usually do. This is where the old expression, "buy the rumor, sell the news" comes from.

In no particular order...

Standard & Poor will be changing the rating of the us government debt to "unsolicited." Basically this means that they can no longer get the data they need from the government, so any ratings will have to be based on best guess analysis from here on out. This is bearish for bond prices and bullish for bond yields.

Gaddafi has been shot, but unconfirmed. This comes along with another rumor that his private jet is ready to fly away full of gold at a moment's notice. So, he is either dead or will be out of the picture by running. My bet is on the second scenario, i.e. a Mubarak style escape with all the loot. Either way, if and when gaddafi leaves, oil should drop a bit because the situation will be more stable.

There is no more free cash to put into the stock market. The reports are that the trading firms are basically fully margined up. They don't have any more cash to put into the market. When everyone is bullish, it's time to look at selling. So watch out below!

Hear a rumor I missed? Post them below.
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Neal McSpadden
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« Reply #1 on: 2011 Feb 24, 03:05:26 pm »

I saw the SP "unsolicited" news on Reuters. I see how that is negative on bond prices. However, is not that bullish for gold and silver? Gold and silver had a sizable selloff after 2. Any thoughts on what happened there?
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tamo42
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« Reply #2 on: 2011 Feb 24, 05:14:29 pm »

There is a lot going with gold and silver right now. Especially silver. Higher yields would actually most likely be bearish for precious metals as the investors can get a better return (than previously) by buying treasuries.

The sell off from gaddafi leaving (toes up or toes down) is just a result of the flight to safety ebbing.
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Neal McSpadden
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« Reply #3 on: 2011 Feb 24, 05:24:35 pm »

Thanks for answering. I looked at yields rising in treasuries as symptom of a sick economy , a sicker dollar, and inflation;therefore, that would lead investors to precious metals.
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tamo42
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« Reply #4 on: 2011 Feb 24, 05:36:54 pm »

Well long term, yes.
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« Reply #5 on: 2011 Feb 25, 04:45:56 am »

Top world oil exporter Saudi Arabia is in talks with European companies affected by the disruption in Libyan supply and is willing and able to plug any gaps in supply, senior Saudi sources said on Thursday.
http://www.reuters.com/article/2011/02/24/libya-saudi-idUSLDE71N13Q20110224                                                                                   ‘Tinker Bell’ Economics Colors Inflation Predictions:Oil prices are rising. Food prices are up. The world economy is gaining momentum. Central banks, still fighting aftereffects of the financial crisis, are keeping interest rates low. Is an outbreak of U.S. inflation around the corner? Federal Reserve Chairman Ben Bernanke says it isn't. "Inflation expectations remain well anchored," Fed officials concluded confidently at their last meeting, minutes show, despite obvious inflationary threats abroad.
The notion is that if we all expect inflation, we'll seek higher wages, prices and rents, and that will produce the inflation we expect. Conversely, no matter what's happening in Libya or grain markets, no matter how much yelping about commodity prices squeezing profit margins, if we all believe the Fed won't permit inflation to take off, it won't.
http://online.wsj.com/article/SB10001424052748704520504576162322026133298.html                                                                                  The $100 Oil Panic: A Libya premium on top of the Bernanke premium. The Fed absolves itself of any responsibility for rising oil prices. It’s important to key in mind, however, that oil was already trading in the $85 to $90 a barrel range before the recent interruption in the Arab world. The run-up to that price territory began in earnest last year after the Federal Reserve embarked on its QE2 strategy. If the President wants to reduce the chances of an even bigger oil price spike, we'd suggest that his Treasury Secretary advise Mr. Bernanke to pull the plug on QE2 and return to a normal monetary policy.
http://online.wsj.com/article/SB10001424052748703775704576162533772791142.html            

US warns extreme food prices will stay:
The world faces a protracted bout of extremely high food prices, the US government has warned, overwhelming farmers’ ability to cool commodity markets by planting millions of additional hectares with crops.                        
http://www.ft.com/cms/s/0/f4189e60-404a-11e0-9140-00144feabdc0.html#axzz1EvHFfpDL

Predicting Inflation: St. Louis Federal Reserve, January 2002. Indeed, by excluding food prices in our traditional analysis of core inflation, we lose more knowledge about the trend in inflation than we gain. The question here is whether food is like energy. We find that it is not. Not only is the food component of the PCEPI one of the least volatile components, but it also has been a relatively good predictor of future inflation. Comparing the past year's inflation in food prices to the prices of other components that comprise the PCEPI, we find that the food component still ranks the best among them all. Food has the smallest RMSE (0.99), while energy has the largest RMSE (10.52). This implies that past inflation in food has been a good predictor of overall inflation.
http://research.stlouisfed.org/publications/regional/02/01/Inflation.pdf        

Bernanke, of course, will ignore food inflation for two reasons: 1) Keeping the busted big banks afloat is his primary goal; and 2) He has bet the Fed and country on his life-long quest to prove the Fed can avert any Austrian economic adjustment, Cheers depends if your positioned well Or this sucks if your like most.  
« Last Edit: 2011 Feb 25, 04:59:04 am by GhostRider808 » Logged
badon
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« Reply #6 on: 2011 Feb 26, 11:19:21 pm »

Rumors are so much fun. I love posting them, especially when I know they're true Smiley In fact, this article was so much fun to read, I think I'm going to have root around to see if I can find any newsworthy rumors out there that would be fun to write about.

With all the dissent in Gaddafi's people, I wouldn't be surprised if he really was shot - but, I think you're right that he probably wasn't. If he were, it wouldn't be a mere rumor for long.
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« Reply #7 on: 2011 Feb 27, 01:25:33 pm »

He's made a public appearance since I published that rumor, so that wasn't true. Fighting has broken out in Tripoli though, so I bet the plane is gassed up, full of gold, and ready to go.
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« Reply #8 on: 2011 Feb 27, 01:33:12 pm »

Hopefully he won't leave behind his harem of female "virgin bodyguards" Smiley
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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.
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tamo42
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« Reply #9 on: 2011 Mar 01, 01:18:10 am »

Here's my favorite latest rumor: the Chinese government is officially saying that there will not be hyperinflation in China this year. Which, if course means there will be, but it will be called something else.

Hold on to your gold!
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Neal McSpadden
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