Author Archives: NFTRH

Greenspan Era Blueprint on Inflation

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For further thoughts on inflation and the content of this article

The post title is best when drawled in Gomer’s thick southern accent. (e.g. “Surprise, surprise, surprise!”)

gomber and carter

I realize Gomer Pyle was way before the time of much of my reading audience, but for the last few weeks I’ve been hearing him in my head as not only NFTRH, but now the wider financial media get on the idea that things are not as bad as had been generally perceived going into the hype fest known as Brexit. Most recently, a writer who always keeps an even keel, Chris Ciovacco, has summarized the situation nicely (as posted at Biiwii).

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Early Inflation Signals

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We have been tracking the coming of an economic bounce phase for a few months now. This dates back to pre-Brexit when market sentiment was over bearish but leading economic signals from the Semiconductor Equipment sector and manufacturing were arguing for economic firming. Voila! We have since had ‘economic surprise’ indexes turn up and it is now two strong Payrolls reports in a row. Funny how leading indicators… lead.

But another component of this economic view is the prospect that this firming could come with an old friend that always shows up eventually after policy makers have been given too long a leash (and since inflationary policy has been in effect in one form or another since Q4 2008, I’d say that is a pretty long leash). Yes, our plan is currently operating to the Greenspan era blueprint, an inflationary blueprint that can see asset markets from the Precious Metals to Emerging Markets to Asia to US Technology rise in tandem.

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A Treasure Trove of Nuggets From the MSM

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It is summer slack season, with no FOMC meeting in August and so into the void go our friends in the mainstream media, with all sorts of noise to distract investors. Here’s one that was anticipated…

Fed should raise interest rates this year, Williams says

From NFTRH 406 (July 31), after the July FOMC meeting in which they fretted about inflation not being high enough (ha ha ha):

“Yes yes, I know the Fed does not see enough inflation yet. And that is just the point. They told us last week that there is not enough inflation and damned if they are not going to keep trying to promote it. It is also worth considering that while they will probably send various expectations managers to their assigned microphones, there is no meeting in August and there is a lot of room for asset price appreciation between now and September 21, per their wishes I assume (by their policy inactions and their inflationary words).

What they didn’t tell us is that they are not stupid (misguided in my opinion, but not stupid) and they know that something built on inflation (metaphor: a substance with opiate-like qualities) must have ongoing inflation (opiates) in order to keep the markets (metaphor: patient) stable. Withdrawal of these substances would mean a come-down and financial detox that would seem like hell on earth to those who think any of this is normal or organic in anyway (like a Keynesian intellectual, for instance).

The game of Whack-a-Mole is ongoing and institutionalized. It is an exciting time to be an investor a casino patron. But we need to be aware of things like the music stopping, how many chairs there are when the music stops and our own egos, bias and limitations.”

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“Gold Counter Cyclical?”

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The title of this segment is actually the subject line of an email sent by subscriber ‘RK’ on Friday, after the post-Payrolls update that included the following statement that RK questioned. From the update…

“Gold is getting clobbered as it should. Let’s please keep it real, because a lot of gold bugs are not going to. The case for gold, silver and commodities rests on an inflationary phase, which strong jobs and wages would indicate out ahead. But for now, the hit to the precious metals is logical.”

The case for commodities (cyclical) always rested on an inflationary phase, but in noting that the same is true for gold it appears that we have deviated from the preferred case for a strong, longer-term precious gold bull; and indeed we have. The point I have been making as the Semiconductor Equipment cycle went positive a few months ago and gold broke down vs. palladium more recently, is that cyclical forces are at work now. That would not be the preferred fundamental environment for gold or gold miners. (more…)

2016: Current Market Themes

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A year ago almost to the day we began tracking a ‘Macrocosmic’ theme that would eventually see gold bottom and rise vs. stocks and bonds in 2016, joining its bullish status vs. commodities, which had been in place since 2014.

Nominal gold bottomed in December 2015 before silver, commodities and stocks as a counter cyclical environment birthed a new precious metals bull market. We updated the progress here, here and here in 2016.

But markets, being the product of immeasurable moving parts, are always in motion and you cannot get too hung up on any one theme, ideology or habit. When the Semiconductor sector began burping up its positive signals for the economy and for stocks, we listened intently and I for one, put my capital where my mouth was and noted as much each week in NFTRH.

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