Jack the Pipper

We said what is interesting about this chart is the fact gold and the US dollar have moved in a positive correlation lately. We’ve highlighted the area on the chart roughly where you can see the two price series started moving together. This isn’t usually the case as you well know.

As we finished up last week with US Nonfarm Payrolls, we were left with a taste of risk-taking. US stocks breached resistance and the dollar flopped, barely holding on above support.

A member of the Crooks family was recently talking about roulette, specifically how he thought that there must be a strategy that can put the odds of winning in your favor. Perhaps there is, but he wasn’t able to vocalize it and we weren’t buying it. Flipping a coin came to mind.

After yesterday’s risk-taking rocket ride the obvious reaction is to sit and watch for a reaction. Will traders take the opportunity to sell after yesterday’s strength? And if so is it profit-taking or simply an opportunity to get short?

We’ve been strident about the idea that global growth decoupling from the US is a myth. The idea being the US consumer is still the primary demand engine for the world, and Mr. US Consumer becomes all the more important as European demand heads into its austerity shell. But today’s news has us wondering a bit about our stridency.

It’s getting ugly out there. So ugly that Paul Krugman is renewing his call for more government stimulus. And based on the darkening picture for the US economy (not to mention the global economy) and US asset markets, we can’t blame Keynesians for feeling a sense of urgency.

Dong, dong, dong….as the hour of Big Ben’s speech this morning from Jackson Hole approaches, bets are being lined up as whether Mr. Bernanke will indeed rev up his helicopter for yet another strategic drop…

The change in mood among market participants from July to August is palpable. It can be seen throughout the globe, but let’s stick to the US for now. The uncertainty factor is again in play on growing concern about a double-dip recession.

A friend wrote to me the other day and sent a link to an article on Bloomberg.com wherein the IMF former chief economist argues the Fed should hike interest rates. My friend wrote

We think stocks are cheap relative to bond yields, but that doesn’t mean stocks can’t collapse. Super low yields say a lot about growth prospects … and all the capital investment not made goes to bottom line.