This is the heart and soul of the web site. Here we have literally tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. You can also click on any category icon to see posts tagged with that particular category.
“The Harbinger of Doom”? Of course we (well, the media) are talking about the yield curve AKA Amigo #3 of our 3 happy-go-lucky riders of the macro. I have annoyed you repeatedly with this imagery in order to show that three important macro factors needed to finish riding before situation turns decidedly negative.
Amigo 1: SPX (or stocks in general)/Gold Ratio
Amigo 2: 30 Year Treasury Yield
Amigo 3: Yield Curve
In honor of Amigo 3’s arrival to prime time let’s have a good old fashioned Amigos update (going in reverse order) and see if we can annoy a few more people along the way. 🙂 (more…)
The following is excerpted from the Opening Notes segment in this week’s edition of Notes From the Rabbit Hole, NFTRH 525 (out on Sunday, November 11). It pretty much came out of nowhere after I did a comparison of Google searches for “inflation” and “deflation” while checking Google Trends for another aspect of the report.
The Google Machine Inspires a Discussion about Inflation & Deflation
Switching gears, while I was in the Google machine I decided to compare two terms that are at the heart of our investment management going forward; “Inflation” and “Deflation”.
It is no surprise that inflation is always much more often searched for because well, they are inflating in one form or another constantly. Whether it is through outrageously experimental monetary policy under the Bernanke Fed or supposedly sound fiscal policy under the Trump administration, it is all designed to raise prices and enrich asset owners, while leveraging debt (which is where the potential for deflation comes in). (more…)
I am sure you remember the lead up to Q1 2016. The US economy and stock market were transitioning from a Goldilocks environment and narrowly avoiding a bear market while the rest of the world was still battling deflation. Precious metals and commodities were in the dumper and try though US and global central banks might, they seemed to fail to woo the inflation genie out of its bottle at every turn.
Then came December of 2015 when gold and silver made bottoms followed by the gold miners in January of 2016. Then by the time February had come and gone the whole raft of other inflatables (commodities and stocks) had bottomed and begun to set sail.
As I listened to Mr. Powell speak about inflation yesterday my mind wandered back to Q1 2016 as I thought about the Fed trying to manage inflation at or around 2%. I also thought about how inflation tends to lift boats, not sink them. At least that is what it does in its earlier stages, in its manageable stages. (more…)
The following is excerpted from NFTRH 496‘s US & Global Market Indicators & Internals segment. It took on a life of its own, considering what you see below is not even half the segment, which itself is not usually a primary aspect of the NFTRH service.
For the last few weeks we’ve used the conditions noted in the graphic below as a guide. Well, the ‘inflation trade’ (IT) popped last week and that included cyclical metals (as well as silver) ramming upward vs. gold and TIP rising vs. TLT & IEF.
As for credit conditions, there is little imminently raising caution flags as commercial lending and risk taking (as indicated by high yield junk bonds) continue apace, but the note still stands on the bigger picture as the credit system and money supply are gumming up with the Fed in quantitative and Fed Funds tightening mode while the velocity of money in the economy maintains a secular downtrend. (more…)
The Bonds segment of NFTRH 491 took a turn to tin foil territory to allow the letter writer to expose newer subscribers to his ideological views and thus, bias. #491 also got pretty talky on the precious metals as it did a thorough review of the sector’s status, with silver’s symmetry to 2016 a very key item. Hint: An ill-fated bounce like so many that have come after the 2016 top is not what we are looking for with the next rally, but it ain’t gonna be easy. You can check out this article for a good piece of the picture: Silver’s Equal and Opposite Symmetry to 2016 Indicates Future Sustainable Rally. On to the Bonds segment…
Bonds, Inflation & Amigos
I’d like to put the bond segment right here after the US stock segment because bonds/yields are so important to sector selections in stocks. (more…)
This morning’s post highlighting Jim Grant’s bond market/interest rate views (by way of Heisenberg) prompts me to reproduce publicly NFTRH 490‘s short bond segment. I may be known as the guy calling yields to decline but in context I am the guy calling for caution at a potential limit area who has appropriately called for yields to rise and decline all through the bond market’s recent history. It is important not to get lost in bias or dogma.
Bonds and Related Indicators
Long-term yields lurk just below our targets of 3.3% (30yr) and 2.9% (10yr). The yields on the short end remain relatively strong as evidenced by the flattening yield curve. This remains a positive macro picture (whether manipulated or not, my job is to play it straight and convey the message of the bond market, not to wear my tin foil hat).
I try to have a lot of different ways of looking at the macro backdrop because if enough of them imply the same thing then a strong probabilities-based thesis can be made.
For instance, currently we are looking at long-term Treasury yields hit (10yr) or get very close to (30yr) upside targets. You know my stance there; I think risk is pretty high for a downward reaction in yields before too long. I’ve backed that view with portfolio balancing positions in 3-7yr and 7-10yr bonds. But even if a reaction comes about (and especially if it doesn’t), the big question is whether or not we are going into territory that has been uncharted for decades.
So are we going to eventually break the Continuum’s limiter? Here is the 30yr yield, almost to a target that few saw coming several months ago, outside of this website when we ID’d the downward consolidation as a bullish flag and used daily charts to gauge bullish patterns in the 10yr & 30yr. (more…)
Too many gold bugs are either still pimping the ‘inflation trade’ or digitally pleasuring other gold bugs with predictions based on inflation. From my favorite example of this behavior just yesterday (he of the “drop dead gorgeous bull wedge” for GDX that failed into a miserable bear market extension a few years ago). Just yesterday…
“I’ve announced a long term target for GDX of $15,000. That really isn’t very high… given the strong inflation numbers that I am projecting for America in the years ahead.”
I don’t use the guy’s name because he is not a big public figure like Dennis Gartman or Doug Casey. But he is highly visible within the gold cult err, “community” and he uses a lot of !!!!! when trying to hammer his points home to greedy gold bugs (the only kind, I assume, who take him seriously). Exclamation points are a sign of someone who really… really, I mean REALLY wants you to get their point!! (ha ha ha). (more…)
Over and over again I’ve been making goofy headlines about the Amigos, the 3 macro riders who will reach (or abort) their respective destinations, at which point the macro is subject to change. The latest update was yesterday with a daily chart view.
Just look at them, the SPX vs. Gold Amigo, the 10yr & 30yr Yield Amigo and the Yield Curve Amigo. So happy-go-lucky while they ride. But #2, the one in the middle, looks like he’s bracing for something.