Stocks Bounce Back

Consumer Sentiment Drops, Ignites Fresh Worries About Economy

WASHINGTON (MarketWatch) -- Ameican consumers were more pessimitic about the path of the economy in February, according to media reports of a survey released Friday by the University of Michigan and Reuters. The UMich index fell to 73.7 in February from 74.4 in January. Consumers were more upbeat about currrent economic conditions, with the current index rising from 81.1 in January to 84.1, the highest since March 2008. However, attitudes about the near-term deteriorated, with the expectations index falling to 66.9 in February from 70.1 in January. Expectations had risen three months in a row. Economists surveyed by MarketWatch were expecting the UMich index to rise to about 76.0.

Stock market bulls are trying to hang onto the Dow 10,000 level.

Stocks Plunge Precipitously in First 10 Minutes

Fresh worries about China are being cited, especially China's decision to raise reserve requirements. Alarms are going off! It's also looking like the bailout for Greece is shaking. Germany is balking at the bailout entirely. Good!
Stocks were down more than 150 points in the first 10 minutes of trading.

Bond Sales Collapse

Feb. 11 (Bloomberg) -- Investment-grade debt sales are drying up and returns on high-yield bonds have turned negative for the year as investors wait to see whether European leaders can contain Greece’s budget crisis.

Mish Shedlock adds the following:

I do not think that treasury yields break to the upside. However, they could. And if they do alongside corporate bond yields, there is a distinct possibility, and one that I have pointed out before, that there may be no places to hide in 2010 other than perhaps the much despised US dollar.

Risk is very high, and rising.

Mike "Mish" Shedlock

Gold Gone Ballistic!

Greece' Debt Problems Coming Our Way

by Niall Ferguson at FT.com


It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem with a farmyard acronym. It is a fiscal crisis of the western world. Its ramifications are far more profound than most investors currently appreciate.
There is of course a distinctive feature to the eurozone crisis. Because of the way the European Monetary Union was designed, there is in fact no mechanism for a bail-out of the Greek government by the European Union, other member states or the European Central Bank (articles 123 and 125 of the Lisbon treaty). True, Article 122 may be invoked by the European Council to assist a member state that is “seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control”, but at this point nobody wants to pretend that Greece’s yawning deficit was an act of God. Nor is there a way for Greece to devalue its currency, as it would have done in the pre-EMU days of the drachma. There is not even a mechanism for Greece to leave the eurozone.
That leaves just three possibilities: one of the most excruciating fiscal squeezes in modern European history – reducing the deficit from 13 per cent to 3 per cent of gross domestic product within just three years; outright default on all or part of the Greek government’s debt; or (most likely, as signalled by German officials on Wednesday) some kind of bail-out led by Berlin. Because none of these options is very appealing, and because any decision about Greece will have implications for Portugal, Spain and possibly others, it may take much horse-trading before one can be reached.
Yet the idiosyncrasies of the eurozone should not distract us from the general nature of the fiscal crisis that is now afflicting most western economies. Call it the fractal geometry of debt: the problem is essentially the same from Iceland to Ireland to Britain to the US. It just comes in widely differing sizes.
What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did. First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped. Second, there is a good deal of “leakage” from open economies in a globalised world. Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect
For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.
Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.
Even according to the White House’s new budget projections, the gross federal debt in public hands will exceed 100 per cent of GDP in just two years’ time. This year, like last year, the federal deficit will be around 10 per cent of GDP. The long-run projections of the Congressional Budget Office suggest that the US will never again run a balanced budget. That’s right, never.
The International Monetary Fund recently published estimates of the fiscal adjustments developed economies would need to make to restore fiscal stability over the decade ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of GDP). Then came Ireland, Spain and Greece (9 per cent). And in sixth place? Step forward America, which would need to tighten fiscal policy by 8.8 per cent of GDP to satisfy the IMF.
Explosions of public debt hurt economies in the following way, as numerous empirical studies have shown. By raising fears of default and/or currency depreciation ahead of actual inflation, they push up real interest rates. Higher real rates, in turn, act as drag on growth, especially when the private sector is also heavily indebted – as is the case in most western economies, not least the US.
Although the US household savings rate has risen since the Great Recession began, it has not risen enough to absorb a trillion dollars of net Treasury issuance a year. Only two things have thus far stood between the US and higher bond yields: purchases of Treasuries (and mortgage-backed securities, which many sellers essentially swapped for Treasuries) by the Federal Reserve and reserve accumulation by the Chinese monetary authorities.
But now the Fed is phasing out such purchases and is expected to wind up quantitative easing. Meanwhile, the Chinese have sharply reduced their purchases of Treasuries from around 47 per cent of new issuance in 2006 to 20 per cent in 2008 to an estimated 5 per cent last year. Small wonder Morgan Stanley assumes that 10-year yields will rise from around 3.5 per cent to 5.5 per cent this year. On a gross federal debt fast approaching $1,500bn, that implies up to $300bn of extra interest payments – and you get up there pretty quickly with the average maturity of the debt now below 50 months.
The Obama administration’s new budget blithely assumes real GDP growth of 3.6 per cent over the next five years, with inflation averaging 1.4 per cent. But with rising real rates, growth might well be lower. Under those circumstances, interest payments could soar as a share of federal revenue – from a tenth to a fifth to a quarter.
Last week Moody’s Investors Service warned that the triple A credit rating of the US should not be taken for granted. That warning recalls Larry Summers’ killer question (posed before he returned to government): “How long can the world’s biggest borrower remain the world’s biggest power?”
On reflection, it is appropriate that the fiscal crisis of the west has begun in Greece, the birthplace of western civilization. Soon it will cross the channel to Britain. But the key question is when that crisis will reach the last bastion of western power, on the other side of the Atlantic.
The writer is a contributing editor of the FT and author of ‘The Ascent of Money: A Financial History of the World‘

Stocks Tank Upon Open

Trader's Attitude Toward Learning

from Dr. Brett-
The recent post on the essence of greatness highlighted the importance of immersion in the learning process to maximize the benefits of structured practice. What we find among those on a trajectory to become elite performers is that they not only work hard; they become fully absorbed in their learning because they find it so intrinsically fascinating and challenging.

If we look across performance fields, we find a common developmental course: before expert performers make their livings from their work, they undergo a lengthy period of skill development. We see this among athletes, surgeons, chess champions, and performing artists. Before they begin their formal careers, they have spent extended periods in a learning process, often under mentorship.

In the trading arena, it is common to see training programs lasting a few weeks to months prior to attempts to make a living from performance in the markets. It's not surprising that a sizable proportion of students in such programs do not succeed. The demands of making a living from trading short circuit the natural immersion of the elite learner. Equally problematic, the brief nature of the training generally means that information is substituted for sustained skills building. It is one thing to learn about markets and setups; quite another to trade them successfully.

When seeking training as a trader, it is important to identify the actual skills-building activities--and the sequencing of those activities--that will support an accelerated learning curve. Performers learn by performing, and they learn by receiving regular feedback from their performances. There is so much more to training than absorbing information from speakers; before you pursue expensive education, make sure that the curriculum is one that can sustain your absorbed interest and efforts. Elite performers cultivate their skills because their development feels more like challenging play than hard work.

More:

Greatness, Happiness, and Performance

What Traders Can Learn From Sport Psychology

USDA Report Bouys Grains

from Arlan:
World corn stocks drop to 60.4-day supply - 3rd tightest of the past 34 years.

Government Jobs Outnumber Goods-Producing Jobs

Trimtabs Unemployment Data Suggests It's Still Getting Worse!

The key take-aways in the following story were that:

• Taxes deducted from employee paychecks are still declining, suggesting that fewer people are working than the BLS reported
• Numbers of people receiving unemployment benefits is up 27% in just two months
• First-time claims in unemployment rose more than 10% in January
• The BLS added in 1.92 million jobs in January due to its "adjustment" process. These are fictitious jobs.
• Historically, January adjustments are followed by later revisions that show actual data to be much worse than originally reported.

“I am really worried about the United States … more worried than I’ve ever been in my career” Bob McDonald, CEO, Proctor and Gamble

John J. Castellani, president of the Business Roundtable, an association of chief executive officers of large U.S. companies, had this to say in May when Obama first proposed the changes: “President Obama’s plan today to increase taxes on American corporations is the wrong idea at the wrong time for the wrong reasons. This plan will reduce the ability of U.S. companies to compete in foreign markets, which will not only reduce jobs, but will also cripple economic growth here in the United States. It couldn’t come at a worse time.”
"I worry a lot about the United States," McDonald told Reuters in an interview from his company's Cincinnati headquarters. "I worry about the deficit, I worry about an uncertain future."
McDonald said he has told government officials that they must "create greater certainty for business." The shift in tax policy toward multinational companies "would be a dumb thing to do" as it would make U.S. companies less competitive versus foreign ones.

Stocks Dip, Then Reverse Course Into Close

U-6 Unemployment Rate Explodes to 18%, a Post-War High!

from Zero Hedge blog:
The January NFP number came in at -20,000, a mere 5k away from Goldman's -25,000 estimate. Consensus was for +15,000. December, as all prior months, saw an expected major downward revision to -150,000 from -85,000. The January Birth/Death adjustment was for -427K from +25K in December. Despite a deterioration in every metric, the unemployment rate dropped from 10.% to 9.7%, even with a consensus at 10.0%. A glitch in the excel model is further corroborated when one considers that the civilian labor force participation rate actually rose in January from 64.6 to 64.7.

Yet a number that avoids some of the constant fudging by the BLS, the Non-Seasonally Adjusted number, hit a new recent record: instead of 9.7%, this number was 10.6%, a 0.9% increase from December!
The same can be seen in the U-6 data. NSA U-6 is now at a record 18%, even as the seasonally adjusted number declined to 16.5%.
SA U-6:

And here is the Non Seasonally Adjusted U-6:

Mixed Message on Unemployment

This morning's unemployment report form the BLS has mixed messages. While the unemployment rate dropped to 9.7%, at the same time, 1.1 million Americans stopped looking for work because they were so discouraged, so they were no longer counted! Stocked erased most of the overnight lows, with the equivalent Dow level being below the 10,000 level, but the mixed message has prevented stocks from rising also.

Obama's Budget Scam

from BLoomberg:
Feb. 4 (Bloomberg) -- Look through President Barack Obama’s proposed 2011 budget, and you’ll see a line calling for a $235 million increase in the Justice Department’s funding to fight financial fraud. Lucky for them, the people who wrote the budget can’t be prosecuted for cooking the government’s books.
Whether on Wall Street or in Washington, the biggest frauds often are the perfectly legal ones hidden in broad daylight. And in terms of dollars, it would be hard to top the accounting scam that Obama’s budget wonks are trying to pull off now.
The ploy here is simple. They are keeping Fannie Mae and Freddie Mac off the government’s balance sheet and out of the federal budget, along with their $1.6 trillion of corporate debt and $4.7 trillion of mortgage obligations.
Never mind that the White House budget director, Peter Orszag, in September 2008 said Fannie and Freddie should be included. That was when he was director of the Congressional Budget Office and the two government-backed mortgage financiers had just been seized by the Treasury Department.

The White House is already forecasting a $1.3 trillion budget deficit for 2011, which is about $3 of spending for every $2 of government receipts. By all outward appearances, it seems Obama and his budget wizards decided that including the liabilities at Fannie and Freddie would be too much reality for the world to handle. So they left the companies out, in a trick worthy of Enron’s playbook, except not quite so hidden.
New Beginning
While the president had nothing to do with the mortgage zombies’ collapse, this was supposed to be the administration that, in his words, would put an end to “the era of irresponsibility in Washington.” Instead, he has provided us a new beginning.
Fannie and Freddie aren’t merely wards of the state. Practically speaking, they are the entire U.S. housing market. Their liabilities are the government’s liabilities. As Orszag said at a Sept. 9, 2008, news conference, two days after Fannie and Freddie were seized: “The degree of control exercised by the federal government over these entities is so strong that the best treatment is to incorporate them into the federal budget.”

That control is stronger today. Congress and the Treasury have given the companies a blank check to blow through whatever taxpayer money is necessary to keep the U.S. housing market afloat. Anyone buying large quantities of U.S. government bonds knows these liabilities exist. So why pretend they don’t?
Making Fudge
Obama’s White House didn’t invent this kind of fudging. President George W. Bush, for example, kept most war costs out of the budget. Obama’s proposal shows about $289 billion of war costs for 2010 and 2011, plus a $50 billion placeholder estimate for each year after that. Those dollars are small compared with the numbers at Fannie and Freddie, though.
Without federal backing, the mortgage guarantees issued by Fannie and Freddie might not be worth much. In that case, the $973 billion of mortgage-backed securities held by the Federal Reserve would be worth substantially less, rendering its $52 billion capital cushion illusory. Of course, it’s ridiculous to think the government would let this happen.

Excluding Fannie and Freddie, the national debt held by the public is about $7.9 trillion. With them, it exceeds last year’s $13.2 trillion gross domestic product. Even the geniuses at Moody’s Investors Service are warning that the country’s AAA rating might not last. No country can owe more than its yearly productive output for long without giving up its accustomed lifestyle and influence.
Catching On
The nation’s debt has become so immense that it’s corroding the government’s fundamental relationship with its own people. Put yourself in the shoes of a young couple thinking of buying their first home. The government needs folks like them to buy into the market to keep demand for houses up.
Yet without all the trillions of dollars of subsidies the government has pumped into housing, home prices would get creamed even worse than they already have, spurring greater loan defaults and saddling the Treasury with ever-higher costs from the guarantees Fannie and Freddie sold. What’s sickening is that the government can’t afford the subsidies. Suddenly, that $8,000 tax credit for first-time homebuyers looks like a nasty teaser aimed at sucking America’s newlyweds into a giant Ponzi scheme.

Worst of all is the example the government is setting for its citizenry. There still have been no indictments of senior executives at any of the big financial institutions that cratered in 2008 while sporting pristine balance sheets. No wonder. The government lacks moral standing to prosecute crimes such as accounting fraud when its own books lack integrity.
And how does Orszag explain his about-face on including the government-sponsored enterprises in the federal budget? Here’s the response I got in an e-mail from Kenneth Baer, a spokesman for the White House Office of Management and Budget: “The relationship between the GSEs and the federal government is in flux. Until it is settled, it would be too disruptive to change how they are accounted for in the budget.”

That didn’t answer my question. (Are we supposed to believe the relationship wasn’t “in flux” in September 2008 after Fannie and Freddie got seized?) So I asked again. Baer replied: “Our statement is our statement.”
It speaks volumes, too, confirming what we otherwise could only surmise: They don’t have a good explanation.
(Jonathan Weil is a Bloomberg News columnist. The opinions expressed are his own.)

China's Monstrous Currency Reserve Bubble

from Bloomberg:
Feb. 4 (Bloomberg) -- Real estate, stocks, credit. China sure has its share of bubbles. Oddly, little attention is paid to the biggest one of all.
China’s currency reserves grew by more than the gross domestic product of Norway in 2009. Its $2.4 trillion of reserves is a bubble all its own, one growing before our eyes with nary a peep out of those searching for the next big one.
The reserve bubble is actually an Asia-wide phenomenon. And we should stop viewing this monetary arms race as a source of strength. Here are three reasons why it’s fast becoming a bigger liability than policy makers say publicly.
One, it’s a massive and growing pyramid scheme. The issue has reached new levels of absurdity with traders buzzing about crisis-plagued Greece seeking a Chinese bailout. After all, if economies were for sale, China could use the $453 billion of reserves it amassed last year to buy Greece and Vietnam and have enough left over for Mongolia.
Countries such as the U.S. used to woo the Bill Grosses of the world to buy their debt. Now they are wooing governments. Gross, who runs the world’s biggest mutual fund at Pacific Investment Management Co., is still plenty important to officials in Washington. He’s just not as vital as the continued patronage of state asset managers in places like Beijing.
Next Step
You have to wonder what folks at the International Monetary Fund are thinking these days. Their aid packages tend to come with messy requirements, such as “get your economy in order.” China’s are merely about scoring resources or geopolitical points. We have already seen China throw lifelines to Wall Street giants, including Morgan Stanley. Entire countries seem like the natural next step.
China’s huge arsenal of reserves is increasing its global influence. The trouble is, China is trapped in an arrangement of its own making. As China and other Asian nations buy more and more U.S. Treasuries, it becomes harder to unload them without causing huge capital losses. And so they keep adding to them.
“This is a titanically large foreign-exchange trade,” says David Simmonds, London-based analyst at Royal Bank of Scotland Group Plc. “It’s the biggest one history has ever seen and there’s nowhere for these reserves to go.”
China aims to diversify out of U.S. Treasuries into other assets and commodities. The question that governments are grappling with is which markets are deep enough to absorb China’s riches? Gold? Oil? Euro-area debt? The Madoff family’s next Ponzi scheme?
Ending Badly
The challenge for China alone is like trying to park an Airbus A-380 super-jumbo in a Volkswagen. Like all pyramid schemes, there’s no easy end in sight and things could end badly. If the dollar collapses, panicked selling by central banks looking to limit losses would shake global markets more than the U.S. credit crisis has.
Two, reserves are dead money. The wisdom of currency stockpiling came from the chaos of 1997. Speculators sensed authorities in Thailand were sitting on few reserves, and they were right. Their attack on the Thai baht set the stage for an Asian meltdown. Governments spent the 2000s determined not to repeat the mistake.
Asian economies have too much of a good thing on their hands. In July 2007, on the 10th anniversary of Thailand’s devaluation, Asian Development Bank President Haruhiko Kuroda said the accelerating accumulation of reserves was a major concern for the region. Too bad nobody listened to him.
Vast Sums
These huge sums of money could be used to improve infrastructure, education, health care and reducing carbon emissions. Never before have we seen such a misallocation of such vast resources. Asia can do better with its money.
Three, reserves add to overheating risks. When policy makers buy dollars, they need to sell local currency, increasing its availability and boosting the money supply. Next they sell bonds to mop up excess money in economies. It’s an imprecise science that often leads to accelerating inflation. The strategy works out to be an expensive one.
The stakes are rising fast. The risks in Asia are skewed firmly in the direction of inflation. The focus is now on central banks to see if they will pull liquidity out of economies with higher interest rates. More attention should be on how reserve management is working at odds with that goal.

Central banks face a difficult task. They must withdraw excess liquidity without devastating their economies and running afoul of politicians. Only now is Asia finding out how some of its economic-protection tactics are amplifying the challenge.
Asia has been holding down currencies to support exports for more than a decade. It’s silly to ignore the side effects of that strategy for the region’s economies.
Think about how Dubai shook the global economy, or how the mere hint that Chinese growth may dip below 8 percent inspires panic. These disappointments pale in comparison with the turbulence that may come from Asia’s biggest bubble popping.

Obama's Keynesian Pyramid Schemes

Feb. 3 (Bloomberg) -- Jobs, jobs, jobs. Meet the new mantra, same as the old mantra.
No longer will President Barack Obama be content to cite specious numbers about “jobs saved or created” as a result of last year’s $787 billion fiscal stimulus. Now he’s proposing $100 billion of new spending to “jumpstart job creation,” according to White House Budget Director Peter Orszag. It’s part of a $3.8 trillion budget for fiscal 2011, unveiled Monday, that projects a $1.3 trillion deficit next year, following a $1.6 trillion deficit this year.
Spend money to save money. Spending dressed up as a jump- starter is still spending by another name.
The only thing missing from the energy-cleansing, rural- community-assisting, climate-change-mitigating, health-food- promoting blueprint is money for pyramid building. In Chapter 10, Section VI of “The General Theory of Employment, Interest, and Money,” John Maynard Keynes advocated building pyramids as a cure for unemployment.
In fact, “Two pyramids, two masses for the dead, are twice as good as one,” he wrote in his 1936 treatise.
There are no masses for the dead in the president’s 2011 budget, only a few dead programs in the discretionary budget. It’s the part of the budget on automatic pilot -- entitlement spending on Medicare and Social Security and interest on the public debt -- that has to be addressed if restoring fiscal discipline is the goal.
Incentive to Cheat

The budget’s job-creation initiatives include funds for infrastructure investment; loan guarantees and tax credits for small businesses to spur hiring; cash assistance to states; and an extension in unemployment benefits, which is a disincentive for job seekers.
While the nation can always use better roads and bridges, a tax cut for new hires, which is popular with both parties, is more problematic and hard to implement, according to Greg Mankiw, professor of economics at Harvard University and former economic adviser to President George W. Bush. How do you differentiate between employment churning -- firing Peter to hire Paul -- and a new hire? How do you treat new firms?
In an October blog post, Mankiw proposed a cut in the payroll tax, something simple and universal rather than complex and targeted. Any attempt to apply more favorable tax treatment to marginal jobs than existing ones “creates a range of unintended consequences,” he said, not to mention an incentive to game the system. Tax Treatment
The budget increases taxes on the rich, living and dead, by allowing the Bush tax cuts to expire at the end of the year. It eliminates capital gains taxes for investments in small firms and raises income, dividend and capital gains tax rates for individuals earning more than $200,000 a year, $250,000 for households. It imposes fees on big banks. (For some reason, the Treasury Department listed the tax cuts as bullet points under job creation and stashed tax increases under fiscal discipline and responsibility.)
In bad times, presidents let themselves be seduced by the Keynesian notion that government can tax or borrow from the public and use that money to pay people to perform work of its choosing without sacrificing something. (See Friedman, Milton: “There is no free lunch.”)
The sacrifice is private-sector investment in human and physical capital. If you accept the premise that the profit- driven private sector is better than bureaucrats at delivering the goods and services people want at the prices they’re willing to pay, then the trade-off isn’t worth it.
Flawed Metrics
How well do government stimulus programs work? Outside of some econometric model prediction, we don’t know. It’s impossible to run a real-world control experiment.
We do know that on Feb. 13, 2009, Congress passed the American Recovery and Reinvestment Act. While the Obama administration insists it was not a jobs bill, the first goal, according to the Recovery.gov Web site, was to “create new jobs as well as save existing ones.”
Thus began the “jobs created or saved” imbroglio, an attempt to quantify something unquantifiable. On Oct. 30, the Obama administration reported that 640,329 jobs had been created or saved from Feb. 17 to Sept. 30. (The Web site has since added 20 jobs to that total.) Watchdog groups smelled a rat, sifted through the data and found jobs that weren’t created in districts that didn’t exist.
Shamed by revelations of bureaucratic ineptitude, the government redefined its metric. Going forward, it would tally all jobs funded by ARRA, even if they already existed.
Pay Without Performance
On Jan. 30, Recovery.gov posted a second report claiming 599,108 jobs were funded in the fourth quarter of last year. While the numbers from the two reporting periods aren’t comparable, the measures are so flawed and the job count so farfetched as to render them close enough for government work, and our purposes as well.
Between Feb. 17 and Dec. 31, the government doled out $57,864,901,449 in federal contract, grant and loan awards yielding 1,239,457 jobs (no inexact rounding for this administration!). That computes to $46,686 per job created, saved, funded or fabricated.
Why not simply write a check in that amount to each new job holder? It would be a lot easier and cheaper than funding a bureaucracy to orchestrate the effort.
OK, I hear you. A job is more than the money it yields. It gives us a sense of purpose, improves our self-esteem and provides a reason to get up in the morning.
The point is, government can always put people to work. It can hire teams of men with shovels to labor for weeks doing the work one earth-moving machine and operator can accomplish in one day.
The goal is to create permanent jobs, increase productivity and contribute to the wealth of the nation. Pyramids don’t cut it. But they’re a good place to bury dead theories.
(Caroline Baum, author of “Just What I Said,” is a Bloomberg News columnist. The opinions expressed are her own.)
Click on “Send Comment” in sidebar display to send a letter to the editor.
To contact the writer of this column: Caroline Baum in New York at cabaum@bloomberg.net.

Fear! It's Ba-aaack!

Dollar and treasuries are significantly higher today, with a broad sell-off in equities thrown in for good measure. Tomorrow's unemployment report had better be good, because if it disappoints, it could get ugly. Very ugly!

If all confidence breaks into a freefall, gold will rocket higher again, as even the Dollar and Treasuries could plunge. That would be economic chaos!

US Dollar

Treasuries

Dow Barely Hanging On to 10,000 Level

Dow is now down almost 250 points.