Wall Street Jumps – Everything is awesome!

Wall Street jumped 4% last night, the biggest daily amount in 4 years.  Conversely gold and silver were down 1.8% and 4.8% respectively.  Why?  Well the all important US Durable Goods Orders data was up 2% in July and then Fed member Dudley came out heavily hinting a September rate rise is (surprise surprise) now unlikely.  So all rejoice the US recovery and free money game continuing and lets pile back into (still) over priced stocks again…. BUT – the usual look behind the headline 2% reveals a different picture if you strip out new aircraft orders.  Ex transports, the rise was just 0.6%, down 2.5% on a year ago.  Take out government debt funded defence spending and it’s still in a 6 straight month of decline.  It also seems to wipe memories of disappointing manufacturing data earlier this week.  That Dudley’s comments were anything but a surprise is simply baffling.  What the last week however has shown is that this is one very strung out market, based on very weak fundamentals (central bank stimulus), making it very susceptible to a crash.  Bubbles pop, they don’t correct.  

By the way the size of the silver slide last night puts the gold:silver ratio at an incredible 79.5.  Contrarians take note!