Another Turn

The investing world again today is hanging on what Janet Yellen, Chairwoman of the Fed, says in Congressional hearings, this time in front of a House panel. Is anyone seriously thinking she will change her tune from yesterday? From the FOMC minutes released last week? Or the press statement issued in late January? What’s the issue, boys and girls?

Essentially whatever “news” you believe in regarding the Fed’s eventual move to raise interest rates, it’s already baked into the economics. And unless something extraordinary comes to light about the American economy, June is looking less likely for a rate rise and September the first viable date. (Although even September is not a lock.) Look for a repeat of the anxiety and speculation as the next FOMC meeting draws closer, March 17th and 18th.

Gold, after having gone up around $7.00 in overseas trading has settled back down, all of its rise stemming from U.S. dollar weakness. Dollar weakness means a rise in gold prices. In regular trading, the yellow precious metal is only slightly up.

Silver was on a different track today, awoken like Sleeping Beauty, by a kiss from the industrial sector, which seems to have found again its need for the metal. It gained a few cents on dollar weakness, as well.

The big trading story of the day is the pause in the 10-day blitz of the NASDAQ. Although struggling today, it seems intent on taking the 5000-point hill it last saw in the early 2000s before the tech bubble burst. While there is a danger at that level, it is largely psychological now. The tech sector is no longer majorly speculative as it was 15 years ago, which is not to say there is no risk behavior in that market.

Risks And Havens

Speaking of risk, the urge for safe haven plays seems, well, played out for the moment. The yen is only up a little while the British pound is finding modest yet continuous strength (as a haven).

A 5-year U.S. Treasury offering came out soft, yields rising fractionally to lure in buyers. There are two other bond sales later this week.

This sort of safety-without-haven approach is an interesting development. It could be telling us that a low-level fear is taking grip, or that a cautious viewpoint now rules, one that believes a pause is coming in almost every market. Or, most likely, it could be telling us that markets have reached a productive stasis with which everyone is happy and money is not jumping around much in search of profit.

Much trust will have to be put on technical analysis while we wait for fundamental news to develop or arise in general.

The VIX, the index that measures volatility in the S&P 500 has fallen since the second week of December from almost a 24 (an assigned value) to around 13 today. More tellingly, in less than a month (since January 30th), it has fallen from roughly a 20 to the 13 we are seeing today out of Chicago, where it is traded. (The lowest it has ever been in the last 25 years was in September of 2007, before the Great Recession, when the VIX was at 10.42. Full disclosure – as recently as July 2014 it was hovering around 12.)

Wishing you as always, good trading,