First they came for the gold stocks…

First they came for the gold stocks…

Then they came for resource rich, emerging economies…

Then they came for commodities…

What’s next? Will the Teflon Don (AKA the S&P 500) escape unscathed this time, unlike Q4 2008?

This is the circle of life in the age of Inflation onDemand, which in my book began in 2001. When inflation expectations rang alarms back in March I thought the result would be a lurch in the other direction, a summer cool down. We’ve got that and more in some areas, but stocks don’t know it yet.

larry

Check out the Citi Economic Surprise index (yardeni.com)…

It’s just one scary indicator in a sea of contrary bearish sentiment, internal divergences and bad valuations. But thus far the Don lives on. Thus far.

Gold stocks are usually the first to sniff out new inflationary phases and the first to shit the bed as inflation starts to ease out of the picture, at least temporarily. As noted with my annoying, some say silly metaphors, you have to invite the Vampire * into your macro house. Right now he’s outside and he’s waiting. He’s got eternal patience. The average casino patron does not care at all about gold stocks and cares less about commodities than the stock market.

The Vampire has not yet been invited because angst is not yet widespread. Meanwhile, gold stock and commodity bulls are being tested but good. Right on cue to the NFTRH best laid plan (not prediction, but a favored plan) I might add. There is a lot to the picture, especially the big picture. This short-term picture is noise; but necessary noise to quiet the bullhorns.

* For those who don’t appreciate or get my metaphors, the Vampire is the Fed; a cynical entity that does not do its dirty work in the light of day. I don’t understand how it’s not obvious, but to this day a lot of people do not get the Macrocosm at all. But that’s a metaphor for another post.

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