Turning Down The Jets

To say today was a risk-off day is a lavish understatement. It was a classic risk-off day, in fact.

Why classic?

There seems to be no hard news driving the hearty downticks in all areas. Classic days are driven by a sense of the table, a feeling that many components are simply over-priced and there is danger ahead. (Although you would think that if there were danger signs gold and bonds would go higher.)

Sometimes money just rushes to the sidelines in a confluence of lack of faith, laziness, confusion and fear.

At 4PM in New York, gold is down 0.75% for the day, silver down almost 1.5%. All metals, precious and base, were down across the board. All grains except rice were down. Other commodities were mixed but in aggregate each complex definitely pointed down, with some outliers.

Oil fell close to 1% while the yield on the U.S. 10-year bond tumbled to 2.50%. The German and Japanese 10-years were also down.

The puzzler is why the Dow fell so hard, given that there was relatively good news from U.S. economic reports. Of course, Wal-Mart had a terrible first quarter, but still...

Gold may be a little easier to explain because it seems that quarterly economic data released today were strong enough to indicate that the Fed will continue to unwind QE3. However, that is not new news. Gold investors focused on the new unemployment claims number, the lowest in seven years.

Although we're trying to investigate, we haven't discovered if there is some information sneaking around out there that only the big insiders have access to. We'll keep you posted.

It does seem that sometimes there is irrational pessimism as palpable as irrational exuberance that finds a foothold in the markets. Today appears to be one of those days.

As always, wishing you good trading,