Bonds Are Another Safe Haven That No Longer Seem Safe!
Thursday, December 20, 9:35 a.m. In my newspaper column last weekend I noted that we have been on a sell signal for gold, and provided a few reasons to be concerned about that previous safe haven. We’ve also been on a sell signal for U.S. Treasury bonds since August and I’ve written a couple of [...]

Thursday, December 20, 9:35 a.m.

In my newspaper column last weekend I noted that we have been on a sell signal for gold, and provided a few reasons to be concerned about that previous safe haven.

We’ve also been on a sell signal for U.S. Treasury bonds since August and I’ve written a couple of columns warning of their overbought condition and risk since.

Nothing has happened to disabuse me of my concerns for that even more popular safe haven.

Investors continued to take money out of the stock market after the 2008-2009 bear market and pour it into bonds, in fact at a record pace in the first six months of this year. As a result, our indicators (not shown) show treasury bonds to be extremely overbought and topping out.

122012c

The iShares 20-year bond etf TLT is now down 8.5% in price from its July peak, while holders of 20-year bonds are being paid about 2.5% a year in yields.

122012b 

Investors may still believe bonds are a safe haven, but obviously someone is selling heavily into the strength being provided by continued investor buying.

Dang. I don’t have my survival gear if world is to end tomorrow!

The world is supposed to come to an end tomorrow based on the well-publicized fact that the Mayans only calculated their calendar out to 2012.

I’ve just discovered that the internet is full of advice on what we should buy or hoard in preparation, ranging from canned goods (and presumably a non-electric can-opener), guns, and warm clothes to off-road vehicles (that presumably get extremely good mileage).

They are apparently presented as serious advice. And it is being followed based on reports of how sales of survival gear have been soaring the last couple of weeks.

So is the world going to completely end, or is it just supposed to be a combination of severe earthquakes and hurricanes, with maybe a few exploding nuclear power plants thrown into the mix, from which survival is possible with some luck and the right gear?

I need to know since I’ve made no preparations. I assumed end of the world meant end of the world in a biblical sense, not just end of the world for some areas.

I’ve got to get to WalMart and a Jeep dealer quick.

To read my weekend newspaper column click here: A Warning About Gold From Inflation, The Dollar, And Mining Stocks!

Subscribers to Street Smart Report: An in-depth update on the short-term and intermediate-term signals on the U.S. market, and signals on gold and bonds is in your secure area of the Street Smart Report website.

Yesterday in the U.S. Market.

Pretty much a negative day all day as fiscal cliff talks stalled. The Dow closed on its low, down 99 points, or 0.7%. The rest of the market was mixed ,with the Russell 2000 and Transportation Index managing to hold onto gains. Trading volume reached 0.75 billion shares traded on the NYSE.

The Dow closed down 99 points or 0.7%. The S&P 500 closed down 0.8%. The NYSE Composite closed down 0.4%. The Nasdaq closed down 0.3%. The Nasdaq 100 closed down 0.5%. The Russell 2000 closed up 0.1%. The DJ Transportation Avg. closed up 0.2%. The DJ Utilities Avg closed down 0.6%.

Gold closed unchanged at $1,667 an ounce.

Oil closed up $1.49 a barrel at $89.42.

The U.S. dollar etf UUP closed down 0.5%.

The U.S. Treasury bond etf TLT closed up 0.3%.

Yesterday in European Markets.

European markets were positive again yesterday. The Europe Dow closed up 0.7%. Among individual countries, the London FTSE closed up 0.4%. The German DAX closed up 0.2%. France’s CAC closed up 0.4%. Greece surged up 4.8%. Ireland closed up 1.6%. Italy closed up 1.1%. Spain closed up 1.2%. Russia closed down 0.1%.

Asian Markets closed up Tuesday night but mixed last night.

The Asia Dow closed up 0.8% Tuesday night, and down, but less than 0.1% last night.

Among individual markets last night:

Australia closed up 0.3%. China closed up 0.5%. Hong Kong closed up 0.2%. India closed down 0.1%. Indonesia closed down 0.4%. Japan closed down 1.2%. Malaysia closed up 0.2%. New Zealand closed up 1.3%. South Korea closed up 0.3%. Singapore closed up 0.5%. Taiwan closed down 1.1%. Thailand closed down 0.1%.

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Markets This Morning:

European markets are mostly up some again this morning. The London FTSE is up 0.1%. The German DAX is up 0.1%. France’s CAC is up 0.2%. Spain is down 0.1%. Greece is up 0.1%. Italy is up 0.1%. Russia up 0.4%.

Oil is down $.24 a barrel at $89.74.

Gold is down $8 an ounce at $1,659.

This Morning in the U.S. Market:

In addition to being the week that will end with the quarter’s quadruple-witching options and futures expirations on Friday, this week will see a number of potential market-moving economic reports including new housing starts, existing home sales, another GDP revision, etc. The Chicago Fed’s National Economic Activity Index will be out on Friday. That’s the one that was getting very close to the level the Fed considers to indicate the economy is in recession. To see the full list click here, and look at the left side of the page it takes you to.

Monday’s report was that the Fed’s Empire State (NY) Mfg Index declined to minus 8.1 in December from minus 5.2 in November. It was the 5th straight month in negative territory, and much worse than the consensus forecast that it would improve to plus 5.2.

Tuesday’s report, the Housing Market Index, which measures the confidence of home-builders, showed an improvement to 47 in December from 45 in November. It is its highest level since the real estate bubble was bursting in 2006. But it is still beneath the level of 50 that denotes normal conditions when more than half of builders expect better times ahead.

Yesterday’s report was that new Housing Starts declined 3% in November, but that was from October which has seen the most starts since July, 2008.

This morning’s numerous reports are that new weekly unemployment claims were up 17,000 last week at 361,000, but the four-week m.a. fell by 13,750 to 367,750, a two-month low. And GDP Growth in the 3rd quarter was revised up to 3.1% from the previous report of 2.7%.

Still to come are Existing Home Sales, the Phila Fed Mfg Index, FHFA Home Prices, and Leading Economic Indicators, all of which will be released at 10 a.m.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being up 20 points or so in the early going this morning.

To read my weekend newspaper column on gold click here: A Warning From Inflation, The Dollar, And Mining Stocks!

Subscribers to Street Smart Report: An in-depth update on the U.S. market, short-term and intermediate-term signals, gold and bonds is in your secure area of the Street Smart Report website.

I’ll be back with the next regular blog post on Saturday morning, as usual later than the week-day posts, probably around 11 a.m. eastern time.

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