Monday, August 19, 2013


Today's 70 point drop in the Dow drop the index down to the low 15,000 area, a full 600 points off the highs of recent months.  Overall, things look really interesting in a bad way as 10 year bond yields are flashing higher, quickly and the stock market isn't exactly reacting well.  Remember, it isn't the actual 10 year bond rate that is concerning as it is still freaking low at 2.88%!  What is concerning is the speed in which it moved to the 2.88%.

Look at the HUGE move since May!

Here's the 30 Year -

What we really need to be watching is the equity and bond market interaction given their independent moves.  For example, if stocks continue to slide, but yields in long bonds arrest their slide (yields go down instead of up and prices of bonds go up), then it will signal a level in which bond buyers feel they are compensated for their risk AND this could mean a big exodus from equities.  Think about this for a moment, even with equity weakness, traders, fund managers, and retail guys have asked themselves...."If I get out of equities, where can I go, bonds suck, so I might as well buy dividend paying stocks".  BUT, if we get to a level where managers and traders rationalize that bond yields are decent enough to be a safe haven to potentially miss out on some equity movement, the markets are in trouble as stocks have pretty much been the only game in town for almost 6 months.

Having said that, if both equity markets and bonds go down too, you better hope you locked in gains when they were easy as I think everyone but Joe 6 Pack has been identifying exits and ensuring they aren't the last out the door.  Remember, Mom and Pop probably just entered this market fully in the last six months, it is probably time to let them have it.

Emerging markets are struggling now and India is certainly in a total meltdown.

The Dow certainly looks like it could drop a minimum of 200 to 300 points here to get back to the lower support at 15,750.

And, speaking of meltdowns, I am no tree hugger, but I'm simply awed by the silence of the commie media when it comes to the potential threats of something that is going on right off the left coast.  I am concerned about this as I'm looking to schedule a trip to Hawaii next summer.  If any readers have some guidance for what to do and where to go, please share them via email or in the comments.

Some light hearted stuff for Monday night.....
Professor Christopher Busby speaks with the RT on the anniversary of the Chernobyl nuclear accident to discuss the ongoing Japanese nightmare in Fukushima.  Like most important and real happenings in our country and in the world, you almost have to go to a foreign source for news to get a decent perspective on reality.  In the US media we'll discover that Beyonce got booed and that everyone needs medical marijuana or each boy and girl deserves to make a choice of what sex they are for that day, but we'll never hear anything meaningful about our constitutional rights being whisked away or the absolute destruction that is occurring in the Pacific Ocean right now.

Word is that the damming of the area and continuous pumping of water into the fuel holding areas has caused the underlying ground and sediment to subside.  Millions if not trillions of gallons of contaminated water are leaking into the ocean which is a nutshell, isn't good.

Have a great week, and you'd better figure out where the nearest exit is....


Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at