So here we have a QE-inflated Euro tanking per ECB’s wishes and an impulsive Uncle Buck, which you must know is not on the Fed’s wish list (hello ZIRP).
There are people talking in tones of assurance that the Fed is going to raise interest rates, but why on earth do you think they have lagged so long, baffling us with alternating Jawbones instead of just doing the conventionally expected ‘right thing’?
Well, I’ve been through it too many times to repeat again so soon (cue the last chart in this post). A market correction started on Friday and if it turns into something more, amid the confirmed slowdowns in Dow components’ exports to Europe, exports in general, Sales to (rising) inventories and manufacturing the Fed just might put a bull’s eye right on dear old Uncle Buck’s back.
Our thesis of resumed economic contraction remains on track and the US dollar is one of the bringers of it. This will eventually be positive for the gold sector, but first the running of the herd has to finish up over there.
