Shenandoah

Things to Watch 8-29-07

August 29, 2007 on 8:51 am | In Old Posts |

Sigh. So yesterday I overslept and didn’t get a chance to post as much. But gang, there is a ton going on. Don’t get trapped looking at the Dow action and calling that “the economy” or “the market”. There is a certain air of panic in the credit markets again and if you see the 10 year bond kissing 4.50% yield as it is of this writing, then you can count on a major panic happening behind the scenes. We’ve watched the 1 month, 3 month, and 2 year Treasuries go nuts in the last week and rumors of major banks having problems persist. There is another shoe to drop and I think the powers that be are trying to stall the event until all the big money gets back from St. Johns on Tuesday morning when the markets open and the super wealthy can “save the day” or take their toys and go home. One thing to watch today is the news on the home builders. While Fitch’s downgrade, after the market close, is a non-event in my book, the implication is there and the information that one of the big boys has not been paying it’s bills down here. The contractors I deal with are screaming bloody murder so let’s wait and see if that information validates next month because if they don’t pay their vendors, then odds are they are not going to make the payments on their corporate bonds either. Watch the yen again today and the US Dollar index as there is a reality disconnect with bond enforced lower rates and the bounce in the USD. That disconnect will end and 78 is the first floor on the express elevator to hell.