Stocks surged ahead this week as many publications and analysts declared, "The Recession Is Over"! The Fed Beige book report was reported as showing signs that the economy was bottoming because although growth was still negative, it wasn't as negative as it had been.

The GDP report on Friday was deemed positive as growth was only down 1% and guesstimates were for it to be down 1.5%. The GDP figures were also revised downward for the last few quarters. In fact, last quarter was revised down another .9%. The actual GDP for the first 12 months of the recession were double the initial estimates. The Fed Beige book report is still showing slowing growth and higher unemployment. We are STILL DECLINING no matter how you look at it.

The market has rallied into our previously predicted target zone of 9000-9400.  9400 is the 38% retracement of the entire decline and is usually the minimum a market will retrace.

Because of this summer’s light trading volume, stocks could stay elevated through August…although volatility should increase. Computer programs (high frequency trading—HFT—which will be discussed in next week’s GPUpdate) are dominating daily trading volume, of which most programs have been set to the buy side.

I fully expect that if the market holds up through August, bullish sentiment will match the peak reached in 2007 when the market consisted of nearly 80% bulls. I say this to prepare you mentally so you can think logically outside the propaganda that has been turned up yet another notch. Keep in mind, this market is quite expensive. One group has calculated the trailing price/earnings ratio to be 700!

Treasuries reversed up this week as we sold another $115 billion in auctions. The first two legs of the auctions were a disaster (the 2 and 5 year notes) then Thursday, Uncle Sam had to step in to buy up the long maturities as no one else would bid on them. Contrary to what Tim Geithner tells us, we are indeed monetizing our debt. This eventually will be the dollar’s demise as we keep cranking out the paper dollars to buy our own paper treasuries. Reminds me of the old Marie Osmond song, "Paper Roses.”

I would continue to avoid the treasury market, as it too faces a certain collapse. Private guesses of the system bailout will reach over 22 Trillion dollars! Has insanity reached a permanent plateau? Folks, this simply will not end well. Don't get caught up in the propaganda, use common sense.

The dollar plunged to a new low for the year as the government stepped up its debt monetization. The more money we print…the greater the supply…the lower the value. Basic economics.

The Chinese were in Washington this week asking tough questions about our future plans with the debt, deficits, and declining dollar. I wonder if Tim Geithner's response was, "Any ideas?” He did promise that we would become responsible and start balancing the budget. It was not reported whether this was met with applause, laughter, or disbelief.

Gold and silver, which usually travel inverse to the dollar, posted gains this week after falling early in the week. These markets will be bullish as long as the dollar remains under pressure. Longer term, I see much higher prices in the gold & silver market (2-4 year time frame).

“A faithful man will abound with blessings, but he who hastens to be rich will not go unpunished." Proverbs 28:20

Editor’s note: Check out the Global Perspectives web site and see the new features, polls, news links, and past issues of the GPUpdate. (www.globalperspectives.info)

¹Market commentary is provided by Mr. Steve Meyers of Grainbelt Commodities, Marco Island, FL