Very simply, the weekly moving average that contained silver through its bear market has been broken to the upside. That is another booster of our assertion from earlier in the…
The market, despite weakening corporate profits and several other headwinds, has decided it liked what it heard from the Inflator in Chief yesterday as it has scored the game Janet Yellen 2, Hawks in Drag 1 and US dollar 0. Is it a final score? I am not sure how our hawkish transvestites can be taken seriously now.
But with a market running on the black boxes of a million quants, large and small, who knows what will happen the next time some clown decides to eat a microphone and dispense dissonance into a situation that Yellen seems very clear on; as my late friend Jonathan Auerbach once famously said (it was famous to me anyway) as we prepared for the post-2008 inflation phase, “it’s inflation all the way baby!”
Ever since beginning the ‘Macrosom‘ theme in July (and updating it here), NFTRH has been managing macro changes that would positively affect the gold sector, and quite possibly have a negative effect on broad stock markets. Early on in the precious metals bear market we noted they were “in the mirror” and opposite the stock market, which on the post-2011 cycle has been the beneficiary of the Fed’s inflation, instilling confidence in their policies by conventional market participants (after all, the right assets were going up on this cycle). In August, it appeared that the first real thrust in the direction of our macro theme kicked in as the stock market cracked.
The mechanism of this confidence racket, which allowed the promotion of inflation right through QE 3, has been a global deflationary force muting inflation signals and providing the US with a Goldilocks benefit as the US dollar strengthened. To this day the economy continues to ‘service itself’. Manufacturing and exports weakened under the regime of the strong USD, but those strong dollars bought a lot of services (which make up the vast majority of the economy) and consumer-related commodities.
So FOMC rolls over on Uncle Buck, secure in the knowledge that it is playing with the house’s money for now. USD could drop a long way before anyone would get overly concerned about it. So in standing down, they have managed to play their own game of global Whack-a-Mole with the currency while continuing to have credibility (waning though it is) vs. their counterparts.
It will be interesting now to see if inflation signals start to percolate. I have remained cautious on the ‘inflation trade’, taking it as a bounce and little more. But if these clowns keep it up we are going to have a genuine inflation effects bonanza on our hands down the road. Here are a couple of things to watch for signals.
Commodities vs. the stock market
TIP vs. TLT…
The Federal Reserve states that its goal is to promote employment and economic growth while regulating inflation. As if it is as simple as pulling levers, tweaking a few knobs…
Here is a look at today's economic data releases. This follows on to yesterday's big bump in Durable Goods (+4.9% correcting a previous -4.6%). The market is cheering the 1%…
Silver vs. Gold and Tip vs. TLT say "no inflation trade yet". Subscribe to NFTRH Premium for your 25-35 page weekly report, interim updates and NFTRH+ chart and trade ideas…
We have noted anecdotally that there is a creeping inflation in the system. It does not show up in commodities, which are in a post-bubble (ah, the good old 'China…
Copper has a long-standing target of 1.50/lb. That is the marker that would take the "copper is very bearish, technically" out of the equation. Might 30 bucks a barrel contain…
By way of @TheStalwart (which was forwarded by a subscriber who has dug up so many quality reference points): Holy crap. Had no idea the Billion Prices Project is now…
What I mean by "Bounce" is not necessarily in the stock market, which is a candidate for one. But in the inflation story. Per the post on T bonds and…
At the prodding of an NFTRH subscriber who was combing through old issues, I went back and read NFTRH 7, from November of 2008 and was struck by how things…
First, for all you right minded wording detectives out there, you are absolutely right... inflation is not rising prices and deflation is not dropping prices. Also, deflation is not two…
Gold vs. Silver and USD have reversed downward today. This would imply a whiff of an 'inflation trade' if it were to persist and lead to a break of the…