Tuesday, February 23, 2010

February 22, 2010 Market Commentary By Art Cashin


On this day in 1630, an American tradition was born. The Pilgrims had been in
America for nearly a decade. But poor shelter, bad weather and worst of all, the flu,
had made it less than a pleasurable experience. (The flu...or something like it...had
killed off more than half the Pilgrims.) So this dark and frigid February cold was
causing a serious outbreak of depression among the recent settlers.

Then a small party of local Indians, led by a minor Chief named Quadeqina, brother of
Massasoit, entered the village to cheer up the Pilgrims. What they carried was many
ears of dried corn. Just what you need to perk you up - -no deer, no turkey, no meat,
no hope. (Could these guys be from the government??)

But Quadeqina did not suggest grinding the corn into meal. Instead he put the corn
on the heat above the fire. In a few minutes the corn began to burst, or more
correctly - - pop. The Indians picked up the "popped corn" and began to eat it. And
one after another, the Pilgrims, just to be courteous, did the same. Holy Smokes; they
thought, this is what freedom is all about - - truth, justice and lots of healthful fiber.
And so a nearly 400 year American tradition began. To mark the event just bring
something new to the marketplace and intone the ancient Algonquin introductory
words of Chief Quadeqina which live forever as part of American lore - - "New, light,
healthy, and tasty."

To celebrate take Priscilla Reddenbacker to a Paul Newman flick. But bring ye not a

There were crosscurrents rather than crossbows on Wall Street Friday. And, there was
even a little popping as the day came to the close.

Dollar Dominance Of Markets Continues But Dismays – The surprise Fed boost in
the Discount Rate late Thursday had sent the Euro reeling and the Dollar (DXY)
soaring. That, in turn, sent commodities and stock futures into a tailspin. That
relationship continued into the late hours of Thursday night and early Friday.
Around 4:00 a.m. (EST), the dollar rally stalled. Commodities and stock futures
regrouped. As the opening on the NYSE approached, the dollar began to recede
slightly. That eased the pressure on both stocks and commodities.

Stocks opened down marginally and by 10:00 began to turn up as the dollar eased
further. Stocks and commodities continued to firm as the dollar rally faded further.
The moves were not dramatic but it was easy to see as stocks, oil and gold moved in
virtual lockstep.

This continuing dollar dominance began to wear on the nerves of traders. More than
a few noted that the dollar arbitrage had moved oil to within pennies of $80. Was
$80 a threat to the staggering economic recovery? If so, why were stocks rallying?
Was this the “new un-normal”?

Despite the apparent paradoxes, stocks, oil and gold moved to simultaneous small
gains. Volume was a touch higher thanks to Expiration activity, but the activity was
anything but robust. That was yet one more frustration to traders.

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