Markets not happy

[J. J.]

Dow now down 446.  Happy birthday, Mr. President.

[J. J.]

Dow down 514.61.

[J. J.]

I doubt that that the markets will be happy Monday.  Der schwarze Tag?

[J. J.]

Me possibly being prophetic.

Down by .5%-1%.  The key is that there is talk of downgrading the US credit rating from AAA to AA+.  That is independent of the debt ceiling deal (or lack thereof).

We'll see how prophetic starting on Monday.

[J. J.]

How bad is the stock market expected to be on Monday? I can't see investors buying stock when we've been downgraded for the first time ever.

Anyone taking his money out of US treasury bonds because of that (not sure anybody is that touchy, but hey) would likely put it into something else, right?

A few institutions have it in there rules that they must keep there funds, or a portion of them, in AAA instruments.  They will be moving out of US bonds.  They won't be moving it to stocks.  Conversely, these institutions, might consider US bonds as a non-AAA alternative, and may move some of their "stock money" into US bonds, with could effect stocks.

That is one of the structural changes.

[J. J.]

How bad is the stock market expected to be on Monday? I can't see investors buying stock when we've been downgraded for the first time ever.

Anyone taking his money out of US treasury bonds because of that (not sure anybody is that touchy, but hey) would likely put it into something else, right?

A few institutions have it in there rules that they must keep there funds, or a portion of them, in AAA instruments.  They will be moving out of US bonds.  They won't be moving it to stocks.  Conversely, these institutions, might consider US bonds as a non-AAA alternative, and may move some of their "stock money" into US bonds, with could effect stocks.

That is one of the structural changes.

With only one of the three major rating firms having downgraded the US so far, I doubt we'll see a rush out of Treasuries because of rules.  Still, I expect T-bill yields will go up sharply Monday followed by some degree of bounce back. Even with a weekend to digest what S&P did, I expect an overcorrection.

S & P is still the one most everyone has heard about over the years.

On the whole, I still hold to my gold prediction, but I'd expect a spike in prices (followed by a roll back, though still higher).

I'm also worried about the possibility of Moody's and Fitch lowering the rating in a few weeks or months.

[J. J.]

How bad is the stock market expected to be on Monday? I can't see investors buying stock when we've been downgraded for the first time ever.

Anyone taking his money out of US treasury bonds because of that (not sure anybody is that touchy, but hey) would likely put it into something else, right?

A few institutions have it in there rules that they must keep there funds, or a portion of them, in AAA instruments.  They will be moving out of US bonds.  They won't be moving it to stocks.  Conversely, these institutions, might consider US bonds as a non-AAA alternative, and may move some of their "stock money" into US bonds, with could effect stocks.

That is one of the structural changes.

With only one of the three major rating firms having downgraded the US so far, I doubt we'll see a rush out of Treasuries because of rules.  Still, I expect T-bill yields will go up sharply Monday followed by some degree of bounce back. Even with a weekend to digest what S&P did, I expect an overcorrection.

S & P is still the one most everyone has heard about over the years.

On the whole, I still hold to my gold prediction, but I'd expect a spike in prices (followed by a roll back, though still higher).

I'm also worried about the possibility of Moody's and Fitch lowering the rating in a few weeks or months.

Nope.  You're wrong.

S&P and Moody's are the two largest bond rating agencies.  Finch is second to those two.  The rest don't matter.

The one most people have "heard" of is S & P, largely through their stock index.  Had it been Moody's or Fitch, it might not have been so bad.

So Link, you are still wrong and still a troll.

[J. J.]

How bad is the stock market expected to be on Monday? I can't see investors buying stock when we've been downgraded for the first time ever.

Anyone taking his money out of US treasury bonds because of that (not sure anybody is that touchy, but hey) would likely put it into something else, right?

A few institutions have it in there rules that they must keep there funds, or a portion of them, in AAA instruments.  They will be moving out of US bonds.  They won't be moving it to stocks.  Conversely, these institutions, might consider US bonds as a non-AAA alternative, and may move some of their "stock money" into US bonds, with could effect stocks.

That is one of the structural changes.

First of all the US has a split credit rating with the majority of the major credit rating agencies rating it AAA.  There may be a very small universe of funds that require all three credit ratings agencies to rate the US bonds AAA.  The majority of funds don't function this way.

Even a minority will effect the market.

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Only in troll-land.

[J. J.]

How bad is the stock market expected to be on Monday? I can't see investors buying stock when we've been downgraded for the first time ever.

Anyone taking his money out of US treasury bonds because of that (not sure anybody is that touchy, but hey) would likely put it into something else, right?

A few institutions have it in there rules that they must keep there funds, or a portion of them, in AAA instruments.  They will be moving out of US bonds.  They won't be moving it to stocks.  Conversely, these institutions, might consider US bonds as a non-AAA alternative, and may move some of their "stock money" into US bonds, with could effect stocks.

That is one of the structural changes.

With only one of the three major rating firms having downgraded the US so far, I doubt we'll see a rush out of Treasuries because of rules.  Still, I expect T-bill yields will go up sharply Monday followed by some degree of bounce back. Even with a weekend to digest what S&P did, I expect an overcorrection.

S & P is still the one most everyone has heard about over the years.

On the whole, I still hold to my gold prediction, but I'd expect a spike in prices (followed by a roll back, though still higher).

I'm also worried about the possibility of Moody's and Fitch lowering the rating in a few weeks or months.

Nope.  You're wrong.

S&P and Moody's are the two largest bond rating agencies.  Finch is second to those two.  The rest don't matter.

The one most people have "heard" of is S & P, largely through their stock index.  Had it been Moody's or Fitch, it might not have been so bad.

So Link, you are still wrong and still a troll.

Wrong again.

"Most people" don't move the bond market.  You're talking about the retail investor or man on the street.  I don't base my investment strategies on the opinion of the mindless masses.  Bond professionals do NOT value S&P's opinion over Moody's.  Frankly I've never heard of ANYONE saying one was more reliable or better known than the other.  Where do you get this stuff?  I think someone has a partisan agenda.

What do you guys think?

Most people do move the markets; much of it based on psychology.  Standard and Poor is a better known brand name. 

Were is this Troll-land where you sell houses?

[J. J.]

Dow Futures down 272 points.

[J. J.]

Dow Futures down 272 points.

Now down only 246 points.

[J. J.]

Dow Futures down 272 points.

Now down only 246 points.

It's all over the place, but it looks like it's settling down 200-250.

[J. J.]

Nikkei down over 1.5%.

[J. J.]

Dow Futures were only down by 189, but they fluctuations.  A decrease in value could be expected, but not a crash.   Nikkei down 1.1%

[J. J.]

I was only vaguely aware of S&P as a bond rating agency.  I was more aware of Moody's.  And given S&Ps track record in the past 4 years... if Moody's still keeps us at AAA, I'm not going to panic.  (I wouldn't panic if Moody's downgraded us to AA+ either).

S & P is a brand name, basically, largely because of the S & P Index.  I never said it was a better rating, just that more people have heard of it. 

I'm looking at foreign reaction.  Jakarta was way off.  Dow Futures are not way off, so far; neither is the Nikkei.  Gold, after solid gains, is now soaring in Asia to $1695, though I think it's a spike.

The markets, while not crashing are being impacted by S & P. 

[J. J.]

Nikkei now down 2%+.  Dow Futures at 239.  Gold hovering around $1699.

[J. J.]

Holy sh**t the Seoul composite is falling off a cliff.

Program trading.  Nikkei is down just over 2%. 

Gold has cleared $1700. Dow Futures down 268, but off max loss.

[J. J.]

I was only vaguely aware of S&P as a bond rating agency.  I was more aware of Moody's.  And given S&Ps track record in the past 4 years... if Moody's still keeps us at AAA, I'm not going to panic.  (I wouldn't panic if Moody's downgraded us to AA+ either).

S & P is a brand name, basically, largely because of the S & P Index.  I never said it was a better rating, just that more people have heard of it. 

So, we can safely assume you have no idea what you are talking about.

Nice of you to sit here posting random bits of information.  Earlier you seemed so eager to talk about the US' credit rating.  How come you haven't been posting the US Treasury prices?  Is it because they have been rallying since the "downgrade"?

This is hilarious.  S&P "downgrades" US debt.  The market reacts by selling everything else and buying US treasuries!  Looks like no one is buying S&P's bunk. 

Good job.  Keep up the cherry picked Glenn Beck Goldline financial report.  I'm dying laughing at you and S&P.

Wall Street Journal headline:  10-Year US Treasury Yield Lower Than Prior To S&P Downgrade

Because, right now, I'm looking at effect on the overall economy (and the effect on gold/silver, but I follow those).

Moody's just said that they might consider a downgrade by 2013.  Fitch is still reviewing.

I think you can see the effect, well, maybe not in Troll-land.

[J. J.]

I was only vaguely aware of S&P as a bond rating agency.  I was more aware of Moody's.  And given S&Ps track record in the past 4 years... if Moody's still keeps us at AAA, I'm not going to panic.  (I wouldn't panic if Moody's downgraded us to AA+ either).

S & P is a brand name, basically, largely because of the S & P Index.  I never said it was a better rating, just that more people have heard of it. 

So, we can safely assume you have no idea what you are talking about.

Nice of you to sit here posting random bits of information.  Earlier you seemed so eager to talk about the US' credit rating.  How come you haven't been posting the US Treasury prices?  Is it because they have been rallying since the "downgrade"?

This is hilarious.  S&P "downgrades" US debt.  The market reacts by selling everything else and buying US treasuries!  Looks like no one is buying S&P's bunk. 

Good job.  Keep up the cherry picked Glenn Beck Goldline financial report.  I'm dying laughing at you and S&P.

Wall Street Journal headline:  10-Year US Treasury Yield Lower Than Prior To S&P Downgrade

Because, right now, I'm looking at effect on the overall economy (and the effect on gold/silver, but I follow those).

Moody's just said that they might consider a downgrade by 2013.  Fitch is still reviewing.

I think you can see the effect, well, maybe not in Troll-land.

Sure.  Sure.  Right.  Oh, I see.  You are following the effect of the US Credit downgrade on every asset other than the one the credit rating is actually talking about.  Ok  You're right.  That makes perfect logical sense.  I guess Reuter's is reporting in "Troll-land" too.

Rush into Treasuries after U.S. downgrade

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That you are so far out of touch with the issues is hilarious.  This has not too much to do with bond ratings but with the economy overall.

People are voting with their money, and they are saying gold.

[J. J.]

They will be moving out of US bonds. 

Here is I really said:

A few institutions have it in there rules that they must keep there funds, or a portion of them, in AAA instruments.  They will be moving out of US bonds.  They won't be moving it to stocks.  Conversely, these institutions, might consider US bonds as a non-AAA alternative, and may move some of their "stock money" into US bonds, with could effect stocks.

That is one of the structural changes.

How is your stock market doing in Troll-land, Link?  Here it isn't doing too well.

[J. J.]

And the Dow closed down by 632 634 and below 11,000. 

Poor link does not understand that the bond value has very little to do with the economy.  Treasury yields are still safer, but they are not safe.

Gold, BTW, currently is at 1713.

Welcome to the second dip of the recession.

[J. J.]

Now about gold.  I can buy a 10 year US bond and keep it under my mattress.  I KNOW in ten years it will be worth $1000 plus interest.  Guaranteed.  Now if you buy $1000 worth of gold today are you 100% certain it will be worth $1000 plus interest 10 years from now?  No of course not.  Gold is for people that like to speculate.  US Treasuries are for people that like to invest.  There is a difference.  A big difference.

But you don't know how much that $1000 plus interest will be worth.

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Sure you do.  Here is a whole bunch:  http://www.goldinmind.com/gold-updates-news/gold-price-forecasts.html  Most are very conservative and gold has exceeded predictions for 2011, in most cases.

I'm holding with mine, though today it looks exceptionally pessimistic.

[J. J.]

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Sure you do.  Here is a whole bunch:  http://www.goldinmind.com/gold-updates-news/gold-price-forecasts.html  Most are very conservative and gold has exceeded predictions for 2011, in most cases.

I'm holding with mine, though today it looks exceptionally pessimistic.

So you are ignoring all those sell recommendations.  My point exactly.  You aren't calling a market top.  You'll hold it for a loss like everyone else.  Thanks for proving my point.

No, I've actually said that if you are looking for a long term investment, more than a year, you should not buy.  I have not though gold was at the high point as of yet and will top off above $2000, probably between February and April of next year.  If I held gold, I would be looking to sell in early 2012.

I expect there to be a lot of profit takers in the market in February.

If someone would offer me five ounces of gold at January 5, 2011 prices to be delivered a year from today, I'd jump on it.

[J. J.]

Dow Futures now down 255.  It looks like we might be in for another sell off.

[J. J.]

Dow Futures now down 255.  It looks like we might be in for another sell off.

Now down 155, so there is improvement.