Friday, June 5, 2009

Very Bearish

For those of you not understanding what is going on all you have to do look is look at the 10 year treasury. The market is finally noticing this. It broker higher just like the S&P 500 did last Friday. Same technical pattern.

The jobs number was a very bearish number. How?? All of a sudden the talk is going to flip to the Fed raising rates or pulling liquidity.

I have said numerous times that deflation will lead to inflation. Not inflation will lead to inflation or inflation fears will lead to inflation. What is happening is the rise in yields will completely choke off any recovery. This will choke off commodity usage. Gold slaughtered, oil down, soft commodities down. The inflation talk in the market for America is actually a good thing. It will force the economy down and continue its clensing process. Now the Fed will mess this up and some point pumping more money into the system (I am talking months or even a year out) and the deflation will lead to the inflation.

We failed at 950. I think the market is heading lower. We may see 900 in the next few days.

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