D&D Note (9-5-2012)
Burning Man… Burns Wall Street. It’s the new image in people’s minds these days, burn the 1%. For those that don’t know, Burning Man is a “art & community” festival held in the desert in Nevada. Black Rock City to be exact. The festival just concluded this past weekend and along with the usual burning of the man, festival goers burnt a replica of Wall Street. Apparently the life size buildings (which is seen as art) cost $100,000 to build, perhaps a bit ironic that they simply burnt 100 grand.
But investors must realize that this is just one more element of the “new normal.” Other elements include lower returns in the market as Bill Gross highlighted today. Another new norm is how the Central Banks of the world now dominate this artificially inflated global market system. Unfortunately, fundamentals are almost a thing of the past. Rather, when and how large Central Banks stimulate and sterilize and twist dominates the volatility of todays markets.
Least people forget the capitalism “money-go-round” has been going on for centuries. Drop interest rates, consumer credit levels go up, snatch back the interest rate leash pushing rates back up, consumers become too leveraged, and are forced to hand over their assets to banks, and then rinse and repeat. It’s a vicious cycle but one that can be forecasted, and thus profit on. Instead of getting foreclosed on.
Traders today stayed on the sideline ahead of the ECB meeting tomorrow. The question is will we get the bazooka or not.
Interestingly global cloud/data storage companies rallied. Shares of American company EMC (EMC) where up 0.23%, China’s 21Vianet Group (VNET) was up 2.23%, and Israeli company ATTUNITY (ATTU) gained 5.38% on the day.
The Dow (INDU) gained 11.54 points at 0.09%. The Nasdaq (COMP) fell -5.79 points at -0.19%. And the S&P 500 (SPX) lost -1.50% at -0.11%.
Oil edged up 6 cents to $95.36 a barrel.
Gold lost $2 to finish at $1,694.00 an ounce.
The 10-Year Note fell pushing the yield up to 1.58%.
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