Good Economic Data and a Quandary

The two NFTRH updates posted yesterday had to do with boots on the ground evidence I received (unlike what the government reports, which we may think we can sometimes trust) that the semi equipment sector is cranked back up.  The equipment companies supply really big ticket equipment to the chip and IC companies.

As if in agreement with the semi information, this morning the Durable Goods data came out strong, but with a big component of commercial and military aircraft.  Also, the CAT CEO is apparently talking negative on economic outlook.  But that’s farms and stuff.  Here in the casino dependent on all the new funny munny policy makers are creating, I think other canaries will chirp first.

I like seeing this market not cheer the Durables and rather, start reflecting upon an FOMC week, rising interest rates (oh and by the way, housing is finally taking a knock) and the continuing prospects for more willful inflationary policy.  Because without more crack, the addict is going to go into severe DT’s and to keep this market from becoming really dangerous, the dumb money needs to get cooled down in a hurry.

The market was created with liquidity manufactured by Central Banks and by speculation manufactured by hedge funds that I would guess covered euro shorts, are piling in long there and shorting the hell out of the Yen.  Meanwhile, the US public is demanding that its financial adviser had better get with the program and start keeping up with the market’s gains.

Something is coming and I am not quite sure what, or how it will present.  When you’re not sure, you don’t step for the sake of stepping.  You stand still and have patience.  If we do have an inflationary 2013 (for our purposes meaning eventual rising asset price effects of the current money printing regime) it is going to end badly, as we remain firmly in an era of boom and bust and increasing moral hazard.  The only question is when.  That’s where our T bond yield ‘Continuum’ chart should come in handy once again.

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