One of the important risk barometers we have learned to pay attention to over the past few years is the ratio of the TLT (20-year US Treasury prices) over the FXC (Canadian currency). As shown in this chart, when 20-year US treasury prices break out as against the Canadian dollar (as it last did in 2008) it issues a serious risk warning for equity and commodity prices. Buy and holders beware.
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“Fed Chairman Bernanke warned recently that whether the U.S. can avoid a recession may depend on how successfully Europe handles its debt crisis.”
I think the Chairman should be warned (before yesterday) that the upcoming and unavoidable US recession’s dept may depend on how successfully the EU handles its debt chaos.