Market Comment

A lot has changed as we launch into the month of February 2006. Federal Reserve Board Chairman Greenspan has retired after 18 years at the helm. To my way of thinking, there is simply no one to fill the shoes of this Ayn Rand protege. He was a giant in our time, and suddenly he is gone.

The U.S. yield curve has hinted at inverting recently, and today a 2 /10 year inversion stayed in place all day long. U.S. yield inversions have reliably predicted impending recessions in years past. Perhaps a one-day inversion is an aberration, but nonetheless I am carefully watching.

I have been a resource bull for months on end, but I'm re-examining my position on this. In the past, "irrational exuberance" in any industry sector you can name, has turned out to be a bubble, and every past bubble has eventually burst with a devastating bang. Now, resource price charts look like they have a serious case of "bubble-itis".

Before the price of natural gas collapsed, I said "hang onto your hats" when it turns lower. Bubble tops don't form overnight, but "hang onto your hats" when the rest of the resource sector begins moving lower.

Greenspan gone, a U.S. yield inversion, and a resource price bubble. I'll admit I'm worried here. A general market selloff? What kind of news would it take to trigger such an event?

Dow Jones Industrial Average (10954
S & P 500 Index (1282)
Gold (U.S. $574)
Crude Oil U.S. ($66.87)