Market Forces and Market Intervention

Posted on May 31, 2013 by MN Gordon

Stocks sprinted higher on Tuesday, releasing the pent up demand that developed over the long weekend.  The Dow rose 106 points.  According to several headlines we read, Dow stocks were boosted by strong housing and consumer confidence reports.

Then, on Wednesday, the market gave it all back…the Dow fell 106 points.  Easy come.  Easy go.

Yesterday the Dow picked up 26 points and the Japanese Nikkei 225 crashed 483 points.  But, despite the stock market’s erratic movements, something else caught our eye.  We watched in awe Tuesday as the yield on the 10-Year Treasury Note jumped to 2.13 percent.

No doubt, watching treasury yields move about is as dull as watching paint dry most of the time.  But occasionally, there’s some dramatic action.  What’s more, this may be one of those occasions.

For example, on May 2 – less than a month ago – the 10 Year Treasury yielded just 1.63 percent.  Since then yields have gone practically straight up…yields have jumped 30 percent just this month.  Could this be the beginning of the end of the great big Treasury bond bubble? Continue reading →

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Our Trip to Sunny Fields

Posted on May 28, 2013 by MN Gordon

“Velkommen til Solvang!” greeted the cheerful woman behind the counter at Birkholm’s Bakery & Cafe on Sunday morning.  We had just made the drive with our wife and kids up Highway 101 and were eager to sink our teeth into a fresh baked Danish kringle.

The Santa Ynez Valley, though just several hours north of Los Angeles by car, is a world apart…both in attitude and ambiance.  The further north you travel the less likely it is that the driver next to you gives you the middle finger as they blow in front of you.  Tensions subside.  Breathing slows.

Somewhere between Woodland Hills and Ventura you can physically feel a change come over you.  The frenetic energy dissipates from a floodwater torrent to a meandering stream.  By Santa Barbara it’s a tranquil murmur.  Upon dropping over the Santa Ynez Mountains any lingering memories of the sea of concrete left behind are pleasantly replaced with a sea of vineyards.

Solvang, which is Danish for sunny fields, is a disorienting delight.  How is it that a small Danish village, where pickled herring and red cabbage are more common than hamburgers and tacos, came to be in a California coastal valley? Continue reading →

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The Mad World of Money

Posted on May 24, 2013 by MN Gordon

About 4.4 million workers disappeared from the labor pool over the last four years.  Where did they go?  No one quite knows, exactly.

They don’t show up in the unemployment numbers.  But they do exist, hidden behind the statistical shadows.  The lucky ones, those who are gainfully employed, get after it each day.  They go to work and trade their time, talents, and labors in exchange for money.  Of those, a small subset is able to spend less than they make…and save the difference.

If the difference becomes big enough, and they save long enough, eventually they’ll build real and lasting wealth.  One day they may no longer have to work, if they don’t want to.  Unfortunately, getting to that point has become increasingly more difficult.

For while the hardworking, prudent, fellow may be able to scrape together a small grubstake.  All the time, even while sleeping, an appointed bureaucrat is busy shoveling money out of his bank account through the back door.  It really does sound quite fantastical, no?  But it is happening all the same. Continue reading →

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Bernanke’s Monetary Philosophy, Explained

Posted on May 21, 2013 by MN Gordon

The days continue to get longer.  The nights continue to get shorter.  This tells us a unique opportunity is in front of us…

It’s time to make hay while the sun still shines.

As for the stock market, the sun has never shined brighter.  Day after day, golden rays of light cascade down upon Wall Street.  Day after day stock prices hit new record highs.

The relentless run up is breathtaking and fantastical.  DOW 16,000…there’s nothing stopping it.  Not even the IRS.

Year to date the Dow’s up over 17 percent.  Many people have come up with many reasons why stocks will continue to rise.  One popular reason, as described by Jeff Reeves at MarketWatch, is that “rates remain low, fostering investment and spending.” Continue reading →

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