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Uncomfortably Numb, Again

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The incoming fire from Washington to the rest of us trying to get along has gotten so out of hand that more and more people are turning away from the crisis to watch, say, the saga of the 9-year-old stowaway to Vegas on a Delta flight. In the markets, more and more money is being forced to the sideline by the inexcusable behavior in Washington and by the inexplicable lack of vigorous movement in any market, in any direction.

Everyone is hovering. 

Yet, one of the stock market's most closely watched measures of investor nervousness, the VIX (Chicago Board Options Exchange Volatility Index), today surged to its highest level since late June, moving above 20.

In the U.S. Treasury market, a sale of $30 billion of 1-month bills maturing November 7, not long after the government is estimated to run out of cash to meet its obligations unless the debt ceiling is raised, met with the weakest demand in more than four years. The 10-year T-bill yield rose ever so slightly. 
The Dow, S&P and NASDAQ are all down. The three European exchanges were down, while the three Asian ones were up earlier today. 
Gold has been as low as 1318 today and almost touched 1330; silver, too, is dancing around. 
The Chinese market reopened after the week-long Nation Day holiday, but Hong Kong dealers said they were seeing light buying interest. China's net gold purchases from Hong Kong fell 5 percent in August from the previous month, but were still robust at 110.5 tons. 

Gold importers in India started processing re-stocking orders ahead of the peak wedding and festival season, this after the customs department cleared remaining consignments at points-of-entry. (Gold imports halted in India for about two months after a new rule was put in place that required a fifth of all imports be re-exported. Banks are just beginning to place orders again after the rules were finally clarified.) 

President Obama has said he was willing to negotiate once the gun is removed from the head of the country. What is lost in the tidal wave of news coverage, though, is that even before these hijinks began, the Democrats and Republicans had been negotiating. It was first the threat, then the reality, of shutdown that stopped those negotiations. Try this the next time you're negotiating for something. Say: "I'm going to punch you in the nose if I don't get my way." Better yet, threaten to punch a random stranger in the nose if you don't get your way.

We have a bi-cameral legislature. One house is in the hands of Republicans, the other house in the hands of Democrats. The presidency is in the hands of the Democrats. Power to create bills having to do with appropriations lies with the House, which is Republican. It seems like a stand-off with a slight edge going to the Democrats in terms of power. For whatever reason, the Republicans think they should rule with acquiescence on the part of the Democrats.

If I disagree with you, it doesn't mean I'm trying to wreck the country. That goes for both sides. You can't stand there and shout your position - a position that's already clear - and expect your opponent to suddenly agree with you as if his only problem is temporary hearing loss. There is no miracle cure for this issue. A good first spoonful of medicine would be for all parties to publicly state what is negotiable and what is not negotiable. We follow the news very closely and we have little or no idea.

If there are cuts to the budget, they have to be balanced with a rise in taxes for those most capable of paying. There's a framework if you're really serious about pushing down the debt and current deficit.

Meanwhile all markets are foundering. Gold and silver are stuck in a range as Congress is stuck in a haze. 
 

Wishing you as always good trading, 

   

 Gary S. Wagner 

Executive Producer


 

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There was NO Current COT this week due to the shut-down

COT LINK  See previous weeks in Historical Commitments of Traders Reports.

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Gary S. Wagner - Executive Producer