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I have harped upon the symbolic picture of the new macro since 2022. That was the year that the trend in long-term Treasury bond yields was broken in a fierce rebellion by a bond market that had enough of the previous decades of monetary and fiscal chicanery.
It’s over folks. What was – a disinflationary continuum in declining yields permitting the Fed and government alike to print/bailout/inflate at will – no longer is. Period.
Excerpted from the November 30th edition of Notes From the Rabbit Hole:
Well, it happens. There will be times when my favored scenarios do not play out. In the current case, one of three possibilities (one of two that were favored) is disqualified and it is entirely possible – with holiday seasonal caveats – that the least favored case will play out. Allow me to dive deeper and review the options.
(more…)The gold stock sector has not been unique since the spring, when it was relatively strong while cyclical markets imploded under the pressure of Tariff mania. However, once the broads got on board the rally theme gold stocks have been part of the party (not unique) and leaders of it.
The GDX/SPY ratio pulled back hard in October, led a pullback in the broad markets, and gold stocks have since recovered leadership after holding the uptrend.
It comes down to a question of when (not if, in my opinion) the broad markets will swing toward a coming inflation trade in a wider segment of the commodity world. Currently, per the work done in this week’s edition of Notes From the Rabbit Hole, NFTRH 889, and many reports that preceded it, we are in an interim disinflationary phase. This has been indicated by yield curves, among other measures we use.
The 10yr-2yr yield curve had steepened with a mildly disinflationary underpinning, as evidenced by the downtrends in its nominal 10- and 2-year yield components. Currently, as the curve travels sideways, neither steepening nor flattening, the question is whether Goldilocks may get an interim bid to end the year.
(more…)As noted last week, I am hearing all too much talk about a market crash to feel comfortable in a bearish view beyond the very short-term. Yes, the national debt (along with debts around the globe) is increasing with no end in sight. YouTube’s algo keeps feeding my TV video interviews of deep market thinkers talking about the coming crash. CNN even talked crash with 1929 author Andrew Sorkin. Ooh, scary!
It was October, after all, the most overrated, supposedly bearish month of the year. Well, nothing is foolproof, least of all market seasonals, but we are now in November, the traditional beginning of the supposedly bullish period that ends with “go away in May.”
The October crash talk is a “tell” that a crash is probably not imminent. Here is another. While I take issue with minor elements of CNN’s interpretation of the Fear/Greed index, you just don’t tend to get market crashes from all-time highs with sentiment readings like this. Market crashes tend to occur after enough bearish activity has already happened to drive mass sentiment to fearful.
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