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The Japanese Yen carry trade has been very much in the news. Recently, our good and faithful (to his boss) Treasury Secretary sent $10 billion of your dollars over to the fine folks in Japan to get some sweet, sweet Yen since, let’s face it, the Japanese Yen has proved itself to be a banger of a store of value.
The bond market has been in bear mode for seven years. Oh my GOD, I could truthfully type those same words for equities! In any case, bonds peaked in March 2020 – – – approximately 390 years ago – – and have been grinding lower ever since. Today is no exception.
A mellow morning to precede the complete mayhem of the FOMC, Meta, and Microsoft. I am typing this just after the opening bell, and we’re down slightly after meandering aimlessly on the /ES for days.
Besides the fact that earnings will be coming to life again next week, the other big event is going to be inflation and the Fed.
Specifically, the CPI numbers on Tuesday morning (coincident with all the big bank earnings) and then the Warsh testimony on both Tuesday and Wednesday (his first ever as chairman and, as always, a great chance for Senators and Representatives to practice their grandstanding).
Excerpted from this week’s edition of Notes From the Rabbit Hole, NFTRH 921:
A hybrid “macro/sector fundamental” for gold stocks is the Gold/RINF (inflation expectations) ratio. HUI (yellow) leveraged the Gold/RINF ratio as it should have, during the 2025 rally.
Here we again pound the table on this: Gold miners leverage gold’s counter-cyclicality and the disinflationary winds that blow during a counter-cycle (with gold rising vs. mining cost inputs and inflation signals). Since modern economies are built on inflationary policy, the miners NEGATIVELY leverage cyclical inflation. As always, I would tune out anyone insisting you buy gold stocks for inflation protection. They are out there.
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