Another rough ride down Wall Street…
March 13th, 2007 by Grant in: Economics, InvestingIt was another rough day in the market. Unfortunately tomorrow could be just as bad, if not worse.
Today the Dow closed down 242.66 points at 12,075.96, its worst drop since its huge sell-off on February 27. The S&P 500 fell 28.65 points to 1,377.95, and the Nasdaq lost 51.72 points to 2,350.57.
The effects of todays sell off are being felt in Tokyo as this is being written. The Nikkei was down 502 points, or nearly 3% in morning trading as the U.S. economy status lingers in traders minds, coupled with a questionable housing future stimulated by faultering credit due high default rates on mortgages.
There is a continuing theme here though, and frequent readers of this blog probably already know what it is. YEN!
The Yen continues to climb against the almighty dollar, meaning many export related stocks in Japan are taking a beating (Sony, Toyota, etc…).
It continues to amaze me as to the amount of leverage the Yen carry trade has on the United States markets, but so it goes.
I still have my GLD position, however I’m becoming increasingly uneasy about it even though it is a rather small position. Not that I fear losing money, I just don’t like to!
So the question becomes, should I sell the gold or keep it? I plan on keeping it around for a while, a long while that is. I think the US economy is about to fall, and when the economy falls, so goes the dollar. If it weren’t for that Yen carry trade, this market would be so much easier to analyze!
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March 13th, 2007 at 10:32 pm
Some colleagues and I were talking today and there are always relationships in the markets on which to trade off of. Meaning at times professionals focus on the bond markets, other times they focus on crude or certain sectors within equities. Right now it’s most definitely the yen. It may seem silly that this currency has such a large impact, but it does, and people will continue to trade off it until the relationship is noticeably broken.
The next big market debacle I’m researching is our debt markets. Fundamentally, foreigners have been buying our debt for decades. Technically, well, just pull up a 10yr Note or 30yr Bond chart….lower left to upper right for the past 20+ years. What will happen when the Asians find better vehicles for investments, i.e. they quit buying our out-of-control debt? A liquidation of our debt market may not happen in our lifetime, but I’d say it’s certainly vulnerable….
March 15th, 2007 at 8:31 pm
Keep tha gold! Keep it for a long time. Where do you have the shares? In an IRA? Sounds like you have a long time till you have to retire. Let that bullion ride!