Hear Ye, Hear Ye: The Market Correction Has Begun (continued)
by AL MARTIN (AL MARTIN RAW.COM)
Now we see that enough losses have been generated from the Great Unwashed that the shills are being forced to change their tune. Now the shills are saying – we told you to get out weeks ago -- which of course is untrue.
How there is global overvaluation in equities, commodities and bonds particularly third-rate burned out sovs (European sovereign nations) whose yields have come underneath that of US Treasuries.
The real signal in my mind came 2 weeks ago, when the Greeks came back to the bond market for the first time in 4 years and sold an issue of 10-year bonds at less than a 5% coupon. It should be noted that Greece is a country whose 5-year bonds had traded a yield of 36% not all that long ago. Portugal has also come back to the market with 10-year paper that they were able to sell at a yield less than that of 10-year US Treasury bonds.
This is a bubble, and not only is it a prelude to a correction, but we have begun the process of pricking the bubble. Meanwhile the Unwashed continue to pile into equities particularly US equities at a tremendous rate.
The numbers from last month in the US mutual fund inflow and outflow show that those who have more than $1 million invested in US mutual funds had record outflows, or withdrew (sold), a record amount of US equities, whilst those who had less than $100,000 invested in US mutual funds, i.e. the Great Unwashed, were record buyers. That's a dangerous sign when the Big Money is getting out and the Great Unwashed are the ones who are buying it up.
So what's next? There is going to be a continuing correction in global equity, bond and commodity markets until such time as the central banks which have dropped the ball, get back on board. They say that deflation isn't a problem, but the fact is that deflation is a problem.
So food prices are rising. Is that inflation or deflation?
Food prices are rising as a result of the bubble in underlying commodity prices, which should be inflationary, yet statistics which measure inflation continue to fall, indicating that deflation or at the very least disinflation is still in the planet's economy. This can be seen by what's happening to real estate, which is beginning to collapse again.
For the rest of this column, click here -- Al Martin Raw
* AL MARTIN, author of "The Conspirators: Secrets of an Iran Contra Insider," is an Independent Political-Economic Analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC. He is also currently trading the commodity futures market day and night and has a teleconferencing service to facilitate transactions in the markets. This is a service for independent experienced traders.
For more details on commodity futures trading recommendations and more FREE Sample Columns, take a look at Al Martin's website "Insider Intelligence" Insider Intelligence for weekly exclusive commodity futures trading recommendations.