Tag: notes from the rabbit hole

The Fed's Great Adventure in Inflation

Posted on by The INO.com Team

In the current policy and media stoked market environment, anything is possible.  It's  the wonderful, magical world of hands-on policy making.  5 years after the financial crisis, but still not enjoying a ramping economy like the good old (and long gone) days of the last great secular bull market (RIP 2000)?  Just sit back, relax and let the man in charge control the image.

"For the next hour, sit quietly and we will control all that you see and hear. We repeat: there is nothing wrong with your television set. You are about to participate in a great adventure. You are about to experience the awe and mystery which reaches from the inner mind to – The Outer Limits." Continue reading "The Fed's Great Adventure in Inflation" →

Gold: "Taper This"

Posted on by The INO.com Team

The media love to get a hold of buzz words and then give them a spin and a life all their own.  Recent examples were the mainstream media's presentation of 'Operation Twist' – which was simply an official yield curve manipulation designed to sanitize and dampen inflationary signals – as an inflationary operation, and the 'Fiscal Cliff' drama that sent herds of conventional investors to the sidelines* when they should have been contrarian (and bullish) back in Q4, 2012.

Now we have the media on the job tending the 'Taper' herd.  Among the many hyped up implications of 'Taper' according to the media are that it is bearish for gold.  But I would put forth not only a rejection of that assertion but just maybe a call for the opposite; a bullish stance on gold in the face of a Fed being coerced by natural movements in the Treasury bond market to talk 'taper'.

As part of its QE operation, the Fed buys long-term Treasury bonds with newly printed money.  It does so to try to keep interest rates down so that the economic recovery they have promoted does not fold in on itself, wheeze, roll over and die.  They also buy distressed MBS, but this is a story about Treasury bonds. Continue reading "Gold: "Taper This"" →

China, U.S. & Inflation

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In light of today's positive economic data out of China, I thought I would reproduce a segment from NFTRH 255 (9.8.13) that speculated upon the possibility of a new up cycle in inflation expectations based in large part on China and its credit growth cycle (on which central planners have announced a planned clampdown). 

China industrial, retail data beat forecasts

The Greenspan Fed provides a handy reference as to how long it can take for a withdrawal of policy to manifest in a new economic deceleration. Continue reading "China, U.S. & Inflation" →

Macro Markets Shrug Off Policy Makers, Ready for a Pivot

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Once again we present the Treasury 'TICs' data for China and Japan, most recently available through June.  It can be argued that these two countries are the T bond market, when considering the volume in which they deal and their strategic status as heretofore T bond consumers.

tics

And now our long-running and most important macro chart, the 'Continuum' in long-term T bond yields; a monthly view of the 30 year yield and its 'limiter' AKA the 100 month exponential moving average (red line). Continue reading "Macro Markets Shrug Off Policy Makers, Ready for a Pivot" →

Commodities, Precious Metals and Economic Contraction

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The 'Commodity' segment, excerpted and expanded upon, from NFTRH 251:

The commodity complex is famous for a sort of 'Whack-a-Mole' quality to it.  Do you remember back in the go-go days when it was NatGas (2005)?  Uranium (2007)?  Crude Oil (2008) and then a cluster of Copper (2011), Grains (2011) and Silver (2011)?

Well today none of them are doing much.  Oil went up but could be topping, Copper went down but is bouncing hard, Uranium, Gas and Grains are nowhere.  The result is this… Continue reading "Commodities, Precious Metals and Economic Contraction" →