April 29, 2009 Stock markets spiked higher early and added to the momentum after the Fed non-announcement. However, there was plenty of profit-taking from the highs of the day into the close. Typically a Fed-day yields heavy volume but that wasn’t the case today as volume remained relatively light. Breadth was extremely positive. Markets never make sense and this is when hindsight kicks-in to provide logic. You get terrible GDP data (dare we say “worse than expected”) and you’d think well, that’s it for this rally. But, the bulls still have the tape. They looked inside the numbers and spun low inventory data as bullish since businesses will have to restock. Or will they? That’s not for us to say. Furthermore, it’s the end of the month and time to get out the green ...

div align=”justify”A town in California blighted by the real-estate bust is having the sun burnt lawns of foreclosed homes sprayed with green paint to create the illusion of prosperity; now the Fed is spraying the tattered US economy with Greenbacks to create a similar illusion. emstrongThe question is: why now? The answer is: because foreign buying of Treasuries is drying up/strong/em, a development I’ve been flagging as inevitable for a while now. Even if foreign official buyers like central banks had a continued appetite for US debt exposure, the fact is that their trade surpluses have collapsed with US import demand. /divdiv align=”justify”Asian merchandise exporters and OPEC have far smaller dollar surpluses to recycle into US debt markets this year even as supply soars; their purchases of agency debt started slumping last Summer, forcing the US government’s hand on Fannie and Freddie; now Treasury buying is also slumping as shown …