Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Long-Term T Bonds Are Making a Signal

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The signal would be toward inflation.  This is crazy talk I know. 
The Fed is going to get all austere and end QE.  Yes, it must be true;
they said so in yesterday’s delayed expectations management exercise.

usb

This is a flipped over view of the Continuum AKA our monthly view of
long-term interest rates.  Maybe the most recent red arrow on the chart
will not result in an inflationary phase this time.  But then again, didn’t the Bond King think that it would be different ‘this time’ in spring, 2011? *

What if it is not different this time?  I give all due respect to
Prechter because I happen to believe he is due respect.  Indeed, I think
EWI are forecasting a top in T bonds as well.  So we must realize that
there could be a scenario where T bonds top out and yet deflation
ensues.  But if the Continuum is to continue, 2013 could turn out to feature obvious signs of inflationary excess before all is said and done.

* Bond King Bill Gross famously shorted the bond just before it
began a huge rise in a flight to the safety (ha ha ha) to US T bonds. 

http://www.biiwii.com

Money Supply, Money Supply, Money Supply

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Did I mention money supply?

adjbase

Inflation is the act of inflating money supply.  The cost effects
will show up later, somewhere or everywhere, eventually.  The FOMC just
acknowledged the ending of the sanitary half of Operation Twist, while
keeping the other half – the inflationary half – intact and ongoing. 
Inflation is a little below their objectives after all… ha ha ha.

See the beautiful consolidation of the graph above.  That is called a
bullish consolidation.  With T bonds indicating a deflationary
backdrop… ha ha ha… there is no longer any public outcry against the
inflators.  Where are the angry mobs of austerity now?  Blabbing about
the Fiscal Cliff is where they are.

‘How you like me now??’ Ben has said to the gold bugs for nearly 1.5
years now.  Well, he just became passive toward the gold bugs once
again.  Gold has been in a pretty consolidation as have the Twisted
Yield curve and that graph above for 1.5 years.

Yesterday's announcement – pending the completion of the final Twist remnants – clears the way for the consolidation to break.

Party on Garth.  Deflationists not invited. http://www.biiwii.com

Pre-FOMC Money Supply Discussion

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With our dear monetary leaders only two days away from bestowing upon
us their latest financial wizardry, we should be aware of the money
supply dynamics in play.  This week FOMC will either ramp the production
of printed money, hang back and play coy while letting the existing $40
billion in MBS carry the load or heaven forbid, talk in some sort of
austere manner in a bizarre game of brinksmanship.

Money Supply Discussion From NFTRH 215:

Moving on, here is how one money supply indicator got it wrong…

m2

(more…)

US Treasury Bonds the Short of 2013?

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The long-term T bond could be a great short even if it remains within
its secular uptrend (interest rates in a secular downtrend) because as
the big picture monthly chart of the ‘Continuum’ shows, there is a long
way up to the 100 month EMA where another theoretical red arrow would be
painted on long-term interest rates.

tyx

Dialing in to a weekly view of the iShares long-term T bond ETF, MACD
and RSI have been sporting ongoing negative divergence for a year now.

tlt

TLT is in a weekly downtrend by AROON, but it is in a daily uptrend. 
We have have a projected 2012 target of just above 130 based on a
pattern we have been following by daily charts.

tlt

Depending on next week’s FOMC and the likelihood that the
manipulators of the macro economic environment will choose ‘inflation’
as the easy fix to unfixable structural problems, the bond could get its
final bump up to target.

By stating they will outright buy a hopelessly indebted nation’s debt
obligations, without the sanitizing effects of Operation Twist, the
herd could knee jerk into the bond amid the Fiscal Cliff uproar, get
nice and comfy and then wait to be sheared as the inflationary effects
(which would erode any perceived ‘value’ of these bonds) of such actions
become apparent in 2013.

This is a valid setup that would go against many people’s
expectations.  After all, gold is forecasting no inflation, right?  Yeh,
right.  The other side of this trade is that where ever gold bottoms, a
chance to acquire monetary insurance would once again be at hand for
people who need such insurance.  Want to bet the herd will once again
choose not to own this insurance if gold visits 1625 again?

That is a level that has been on radar all along.  Here, let’s update the weekly charts.

au

Gold is clinging to the critical 1690 parameter.  If it should lose
this level and get the majority of technicians wrangling even more
obsessively, it is going to the green shaded support zone.  It’s only 70
bucks lower after all.  Gold could do that with one hand tied behind
its back.

au euro

Meanwhile, gold is at the lower limit of the Ascending Triangle in
Euros.  The Euro is getting over bought by a global herd that, if it
could just step outside of itself and observe itself objectively, would
appear quite absurd.  Wasn’t it just last summer that Europe was
ending?  You see the hilarity of course.

But technicals are technicals and gold would preferably stabilize in
Euros now at the lower triangle limit.  Of even more importance is the
purple weekly EMA 60, which has supported Au-Euro on previous breakdowns
below the EMA 40.

This was going to be a quick post on the long bond and inflation. 
Then it expanded, I guess because I find it really interesting to see
the role gold is playing in the run up to FOMC; the same FOMC that has
stated that Op/Twist is ending this month, which would leave any future
inflationary operations unsanitized.  You see? http://www.biiwii.com