FOMC

[edit]  So anyway, all wise guy stuff aside, the Fed obviously means business in its effort to put policy-made stock bulls into another gear higher.  This tells us two things (at least)…

  1. They do not want you to short stocks and
  2. This is not your normal recovery

Please don’t tell me that there is anything normal here.  If it were anything even in the same zip code as normal there would have been some words of impending something or other by now.  Instead, it is all clear as far as the eye can see… and beyond.

Inflation apparently needs to get stoked up before these people will even bat an eye and in the absence of inflation signals, this is what we are going to get; full heroics over at Policy Central.  Is what it is and speaking personally, I am going to take the market we’ve got, ginned up or not.  It could well go bullish here, but there is also a potential ‘sell the news’ thing in play as well, especially considering a macro indicator like Junk Bonds in an earlier post.  We’ll see.  Meanwhile, good job Janet!  I knew you had it in you!

Blah blah blah…

“When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.”

Blah blah blah…

Is the Will to Speculate Dying?

This market is so interesting.  I feel like just putting up chart after chart and letting you come to your own conclusions rather than always being so wordy about everything.  Here, take in the message of one of the most speculative excesses bred by the Fed’s policy (lust for junk bonds, top panel) and junk’s relationship to what is thought of by the masses as a safe alternative.  Let the picture tell its story…

hyg.tlt

Yield Curve Today

The 10→5→2 year curve is what you’d expect; it is dropping with nominal yields rising on GDP surprise day.  The implication is risk ‘ON’ and clear sailing as far as the eye can see.  See that Janet?  What could go wrong with a little rate hike chatter today?  Have confidence in a job well done!

10.5.2.yields

10, 5 & 2 year yields from Bloomberg

Ms. Yellen: GDP Says Hike!

Dear Janet, the Red Herring that was the Q1 GDP has now morphed into a 4% Q2 GDP.  The economy is booming Janet and furthermore, the ladies laden with bags shopping at Macy’s pictured in the Bloomberg GDP article look like they mean business.  Look at that consumption lust in their eyes!  Get out in front of them!  There is nothing like an American consumer on a spending binge.

Here is what I want you to do Janet.  I want you to put this thing right.  Mr. Bernanke has fixed the economy through expert monetary wizardry.  The bears, clinging as they were to that Q1 GDP number seem to be finished.  Employment and manufacturing are gearing up and things could not be better.  I mean, why nitpick about fractional disparities to targets.  Momentum alone will put employment and future extrapolated GDP over the top of your targets.

I realize that there are few inflation signals out there and gold is well contained.  I realize that may embolden your FOMC to just stay steady as she goes.  But please try to look around corners where inflation problems may lurk and also please consider the desperate situation of the non-investor classes.  Please come to the aid of savers.

A great job by you and your associates, now it is time to back out.  It’s as good as it gets!

[edit]  Yes, my tongue is in cheek on parts of this post, which features some of the typically confusing refusal to connect the dots, and irony. 

Devaluation: The Most Destructive Policy of All

Guest Post by Steve Saville

“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the existing distribution of wealth*. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers’, who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose.”

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Death of the Dollar? Gold an Inflation Hedge? Really?

[ed: Excerpted from NFTRH 301's opening segment.  Those looking for paint by numbers directions and casino game instructions (talking to readers at a certain site that may or may not re-publish this article) feel free to just skip the article.  You will not get what you are looking for.  The balance of NFTRH 301 did the nuts and bolts technical work on the relevant US and global markets, precious metals, currencies, etc.]

[edit 2] Based on reader feedback from another site, it appears I do not understand inflation, nor that gold’s purchasing power is superior to that of the USD over the long term.  What I take from this is that if you post anything positive (like USD’s ‘price’ potential) about the buck and/or negative (like gold’s price vulnerabilities) about gold certain handbook carrying people in the gold ‘community’ are going to lash out first, and read/consider second.  In other words SSDD.

Take a look around the gold bull landscape and tell me how many of them are featuring a chart like this, showing the US dollar in a bullish short-term stance (to go with the weekly bullish stance we have noted for so long in the ‘Currencies’ segment).

usd.daily

This is not to say that the US dollar has real value. How can it when it is hopelessly dragged down by a national debt-for-growth obsession. But as with gold, value is one thing and price is quite another. It is just that one (USD) receives a price bid due to a ‘nowhere else to hide’ sort of mentality by the majority when asset market liquidity becomes constrained and the other (Gold) receives a more solid value bid, over time.

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Uranium; Hype or ?

Last week we did an NFTRH+ on Uranium in general, with a focus on the Global X fund URA.  I personally decided to take a try with its largest holding, Cameco today on the drop to the SMA 200.  The next clear level is at just above 20.

ccj

Of interest is Uranium holder Uranium Participation, U.TO, as it sports a healthy premium to its NAV as of the end of June ($CAD 4.03/share vs. today’s stock price of 4.95).

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What’s the Canary Doing?

Last week the Canary in the coal mine had a hiccup.

sox

SOX daily, from NFTRH 300

Further, the Canary’s Canary, the Semi equipment stocks took a hard hit.  The equipment stocks like AMAT, LRCX, KLAC, etc. were the ones whose ramp up we used to gauge coming economic (esp. manufacturing) strength [note: AMAT is making a Hammer candle at S/T support today].  Sooner or later the SOX’ big picture, massive breakout around 560 may get tested and that test would mean only everything for the broad markets.

Meanwhile, the S&P 500 ambles along…

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Fed Balance Sheet & Gold

Gold led the massive Fed balance sheet expansion in 2008, rolled upward in concert with the more gently expanding balance sheet and then topped out and dove as the Fed balance sheet kept on… well, you know.

So, despite the promotion of QE 3 gold (and silver) tanked into a bear market.  The question is whether or not gold is still leading the Fed’s balance of ‘asset’ holdings or whether gold through various – and well documented – official manipulations like the inflation-sanitizing Operation Twist, has some catching up to do.

fedbal.gold

Fed Balance Sheet & Gold, courtesy of MacroTrends