alice

NFTRH; Post-CPI, Retail & Pre-FOMC

Well, the Fed’s rate hike was all but a given until this morning’s data dump, tamping down inflation expectations even further. CPI continues to wane and Retail sales are the weakest in 16 months.

The stock market doesn’t mind, although commodities and probably Financials do mind as interest rates plunge, perhaps driving bonds to our upside targets (TLT to 129).

As we have belabored again and again, this, not inflationary hysterics, is what the gold sector needs for its best fundamental situation. Now it is just one day’s data and there is a big goon called FOMC coming out with a data dump (or lack thereof) of its own this afternoon.

But in a microcosm, this is the stuff of economic contraction and while gold stocks (using HUI as an example) remain below key resistance (April and February highs) one scenario is that rate hike or no rate hike, there could be a surprise move in the sector (ref. monthly HUI chart and HUI/Gold ratio chart) while everyone is looking down due to a lack of inflation.

Let’s see how the day goes. My guess is that FOMC still raises, but that’s pure guess work.