Hovering Circumstances

The good news is that finally Russia seems to have been brought to bay regarding Ukraine and appears willing to "go international" on solving the problems, which really, when all is said and done, don't seem all that insurmountable. It would be better for Ukraine, Russians living in Ukraine, and Russians in Russia if a genuine effort to deal with the West were made.  

That good news is bad news for gold bulls, but not really terrible news, given that much of the premium brought on by the crisis has been wrung out of the price of gold already.

Chatter about lower demand from China is feeding the slight softness, too. There is surely a slowdown in the pace of increase in Chinese demand, but nothing grows exponentially forever, except the universe... even then, one never knows.  

U.S. first-time jobless claims remained relatively steady - better than predicted - and a surprisingly strong manufacturing report from the Philadelphia Fed's economic region also helped move money from hedging instruments and safe havens into the equities.

The Philly region's manufacturing index was expected to go from 9.0 to 10.0 but instead it soared to 16.0, a drastic jump in activity by any measure. The Northeast, in general, is a very interesting manufacturing surprise, as its deeply embedded educational strengths begin to take hold in the manufacturing field.  

The new manufacturing requires highly trained people - if not engineers and computer science majors, then the equivalent. These are not your grandfather's factory jobs we're talking about any longer. They are also important to the economy because jobs in the more liberal Northeast tend to be higher paying and come with better benefits.

There has also been a lot of talk that gold ETFs are beginning another round of selling, sending up trial balloons, although we await verification on that. It seems like an odd time for them to be doing so since many of those funds just recently added to their caches. But they are notoriously erratic and can't seem to find their footing in the swift moving rivers of trends and counter trends.

The U.S. 10-year note has also pushed back over the 2.7% range, an area that draws in more investors beyond the risk adverse ones who consistently play that market.  

It ought to be noted that Federal Reserve Chairwoman Janet Yellen affirmed yesterday that monetary policy will need to remain quite accommodative for the foreseeable future, citing slackness in the labor market and low inflation.

We've read some of Yellen's past writings on the economics of employment and we could very well see a quest for 4.5% unemployment become her Holy Grail.

Finally, as we mentioned earlier in the week, precious metals trading comes to an end today, Thursday, because tomorrow is Good Friday on the Christian calendar, and marks the sabbath that falls within Passover week. That covers about 99% of the professional traders and investors in New York and London.

As always, wishing you good trading,