It’s in the Hole…

If you believe the talking heads on CNBC, FOX and even some of the major newspapers across this country of ours, (purposely ignoring those emails from ‘reputable’ sources), Europe is on the brink of falling off the planet, the U.S. economy is repeating a 2008-09 plummet into recession, the world’s political class is unconcerned and unrepentant in their desire for the middle class to falter into oblivion, September is historically terrible for the markets, so run and flee into the hills with your guns, vacuum sealed food and ingots of Gold.  And by the way; there is no Santa Claus.

In nine of the past 11 weeks, we’ve seen U.S. equities post gains and record new highs on the S&P 500 and the NASDAQ 100.  Not too bad if you think about it but certainly not a tiptoeing on a razor’s edge towards disaster.  Globally, weakness was more widespread regarding Asian economic growth and the European debt crisis continuing as more fractures in the united shield appear.  Attention will be diverted to Jackson Hole this week, not only to deconstruct the comments of the Fed Chairman, but the even more keenly awaited speech to be given by ECB President Mario Draghi.  Central bankers, right in front of our eyes are preparing to move the world, again.  At this point anything is possible, so stay tuned and alert.  I think there’s more to that story but time will flesh that out eventually. There is weakness a plenty to go around and the time to act is now.

Treasury yields snapped a four-week run up with a sharp drop. The 5 year note closed just over 70 basis points, the 10 year under 1.7%, and the 30 year bond under 2.8%.  The falling yields ended, at least briefly, a correction in bond prices across most sectors.  WTI crude oil, after trading at more than $98, closed the week just above $96. Natural gas began the week by recovering some of its recent losses, but gave back the entire week of gains on Friday.  Corn reached another new closing high Tuesday, but erased most of the week’s gains by Friday. Wheat saw a comparable trading pattern, but remained above $8.50.

I remain optimistic, cautious and intrigued.  There is no reason for Chairman Bernanke to show his hand this Friday, realistically I’m waiting until after the August employment reports arrive before I can substantiate the ‘hints’  the Fed has been giving for weeks now.  The GOP convention will perhaps grab some more unwanted headlines this week, but I do not see a market moving event coming from it.  They will be more concerned with ‘Imaging’ as they do not need the visual of the GOP celebrating when some communities in the gulf region face the possibility of serious Hurricane damage and flooding.  It will be interesting to say the least.  I remain optimistic.