Watch On Wall Street

Watch On Wall Street

It makes for a compelling storyline to say that we have suddenly gone from Fed watching to Wall Street watching. And for good reason. As money begins moving around the various tables set up for different financial bets, gold appears to be back in the mix as an alternative to what may be a volatile period for equities.

The stock markets fought back today in the U.S., although earlier in Asia and Europe they were hammered again. In New York, lower prices were seen as a buying opportunity, although the move was tepid. As of 3:30 New York time, the Dow is up 0.4%, the S&P 0.7% and the NASDAQ, on fresh tech sector news is up about 0.9%.

Call us cynical, but we believe people are starting to worry about the economy again. And given the demographic composition of the investor cadre, safety is probably topmost in the minds of one strategic group: Baby Boomers. 

During the meltdown of 2008-9, the leading edge of the Baby Boomers was just turning (roughly) 60. Today's 60 year olds were only 54. Both groups, while they took hits, were relatively calm about it, sensing that they had some years to allow things to return to normal. Now, any frisson of fear could turn into a major rout for equities. 

Will this kind of fear turn over into a flight to gold or silver? It is too early to tell. 

But today, in spite of the stock markets' recovery, gold is down only 0.15% and silver is up 0.8%. Gold may have suffered a bit from a crisis of confidence that has been ongoing but which seems slowly to be dissipating. Silver may have been seen today as a relative bargain. 

There was good news for the U.S. economy, which had to suffer through some bad news yesterday. New orders of durable goods outside the volatile transportation sector, rose at the expected rate, 0.2%, in January. This seems to be telling us that the world's largest economy is going to weather the cold weather wrench that has become a permanent sort of spanner in the economic works in the last few months.

"Manufacturing will expand at roughly the same pace as the overall economy in 2014," said Gus Faucher, a senior economist at PNC Financial Services (Pittsburgh). "Consumers are gradually increasing their spending, business investment is picking back up again, supporting spending on capital goods."

We are in the "go-lightly" economy. No boundaries will be pushed hard very soon. At least not until the sour taste of the recession is rinsed out of both investors' and consumers' mouths.