The Trading Floor

[mick]

an excerpt from taipan, 04/14/04
The precious metal markets were in absolute disarray
yesterday. Gold was down over $15 at one point, then
bounced back to close at $407. Overnight in London, the
barbarous metal continued to sell off, falling an
additional $7 to just below $400. Silver got whacked hard,
too... dropping 57 cents, or 7.12%, to $7.45 an ounce. Gold
stocks were murdered, receiving the double whammy: soft
equities and soft metals (To illustrate: Silver Standard
dropped 13%, Western Silver 9%, Vista Gold 8%, Goldcorp
6%).

- Conversely, the dollar rallied all the way to a buck
eighteen against the euro. The last time the greenback saw
this level, November 27, Americans everywhere were
comfortably tucking into a steaming plate of turkey and
stuffing.

- Our friend Chuck Butler, watching the currency markets on
the Everbank Trading desk, summed up yesterday's action
nicely: "I'm very confused these days," writes Chuck, "by
the rhetoric that comes across the screens and in the
market place.

"For instance, this morning... I see a report that says the
dollar is gaining VS all currencies on the basis that it is
believed CPI will be higher in this morning's report...

"What? Pardon me, but isn't inflation the bane of all
currencies? OK, I realize that the traders and investors
that wear short-term glasses, are only looking at this as
an indication that the Fed would be moving interest rates
higher...

"Again though, this is where I get so confused, because
with U.S. rates so low, how much higher are interest rates
going to have to go to bring U.S. assets up to those
offered in Australia, New Zealand, or even the U.K.? And
even more important, who among us believes that the U.S.
recovery can withstand 200 to 300 BPS of rate hikes in less
than a year?

"So, you can see my confusion with the dollar bulls holding
the hammer right now... "

- Mainstream stocks fared better, but not well. Like a
fainting woman needs a cool rag for her forehead, a glass
of water and assistance sitting on a couch, the ailing Dow
could use some investor TLC. Instead, it got hammered
yesterday... losing 134 points to close at 10,381... and is
off another 40 points as we write this morning. The S&P
slid 16 points to 1,129, while the Nasdaq shed nearly 2% to
close at 2,030.

- The market's sell-offs came despite reports of a 1.8%
rise in retail sales, released just moments before the
opening bell. Interest-sensitive stocks - banks, utilities
and financials - were hit hardest. Meanwhile, government
bonds also sold off, predictably; the 10-year Treasury
added 11 basis points to yield 4.34%.

me:
looks like the markets are looking for some excuse to go down.