The month of September represented a period of time to truly sit back and become awestruck. Not because of the so-called good things that happened, which were implied by the rising stock market, but rather because of all the bad things that were suggested by a rising bond market and the dramatic decline in interest rates. The free-fall of the ten-year treasury to levels not seen since the Dow Jones was in 6,000 territory tells the story of increasing unemployment, rising foreclosures, escalating bankruptcies, significantly more food stamp participants, and a currency war that is just beginning to heat up.
If the Dow is right, and the level of 11,000 is accurate, then all the prior economic problems are simply an illusion that will drift away like a dream. However, if the bond market is right, then that dream suddenly becomes an unbearable nightmare, making 1929, 1987, 1999, and 2008 seem downright mild. Unemployment, foreclosures, bankruptcies, and food stamps are no dream, and the currency war will become a veritable nightmare.
Preservation, protection, and a keen-eye are the watchwords.
Till next time,
Bill
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