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I FELT A GREAT DISTURBANCE IN THE FORCE

Mar. 25, 2010 7:12 PM ETSPY, RSP, VTI, MDY, IWM, QQQ, IGV, ORCL, SMH, XLF, KRE, XLY, BBY, XLI, XLB, IYR, IYT, IEF, TLT, BWX, FXE, FXY, GLD, DBC, XLE, DBB, XME, DBA, EFA, EEM, EWJ, EWA, EWC, EWZ, RSX, EPI, FXI
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I FELT A GREAT DISTURBANCE IN THE FORCE

There truly are odd things going on which argue for caution. First, we have serious troubles in bond markets with auction results and continuing supply issues. The global sovereign debt issues are particularly burdensome and troubling in developed countries from the U.S. to Europe. Couple this with a Bernanke comment that interest rates need to remain low but then added a note not lost on bond vigilantes. When asked about the balance sheet of the Fed he stated that there was $2.3 trillion (yes with a “T”) in balance sheet items and wants to reduce it to a mere $1 trillion. As stunning as both figures are, this is just toxic waste carried at what cost? Par? If the Fed wanted to reduce these amounts then they could just be honest and mark them to market and achieve the same result since who would buy this junk at face value.

Next, the current dollar rally doesn’t generally bode well for U.S. stock prices as exports are made more difficult. Further, if the Chinese were to revalue the yuan higher that would be inflationary for U.S. consumers. Both the yen and euro are breaking down against Uncle Buck......READ MORE!

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