OK, it’s finally happened so hopefully talking heads can stop obssessing about this magic number. Traders in the more esoteric spaces, like non-agency mortgage bonds, are even feeling the love. We get another round of bank earnings tomorrow, including Goldman Sachs, which if they’re anything like JP Morgan, could ignite even more euphoria in markets.
All the goldbug fever, not withstanding today’s pullback in the yellow metal’s price, got me thinking about just how well has gold stacked up against say stocks and oil over the longer term. I picked 2004 as a starting point for no other reason than it gives enough distance from the mania of the credit bubble and the distortion of its popping.
It’s hard to believe that little over a month ago, investors were holding their breath to see if the S&P 500 had enough momentum to burst through 950 – a psychological level that had held firm since November of last year. Carry through buying Monday from last week’s renewed cheer that the U.S. and global economies were leaving recession behind has pushed the S&P 500 to 1033, its highest level since Oct. 6, 2008 when it traded at 1056.89.
Yowza is the word that comes to mind when looking at the major stock gauges. The DJIA has burst through 9,000 and the S&P 500, up 2.2%, at 975. Reuters is chalking it up to strong second quarter earnings and a pop in existing home sales. The pace of the rally in recent weeks, however, is starting to send signals that this may be overdone.