“Inflation has continued to run below the Committee’s 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months”
The problem is, that like their innovative friends at the BoJ, which apparently thinks it is going to now engineer the Japanese yield curve into an inflationary environment, the US Fed is too heavily involved in the Treasury market. So I ask you if just maybe the signals they are looking for in bonds are all screwed up by their very presence in bonds, 24/7 and 365 since 2008? Hello Op/Twist… Continue reading "FOMC: Not Enough Inflation, Folks"→
Yes, it’s another inflation post going up even as inflation expectations are in the dumper and casino patrons just cannot get enough of Treasury and Government bonds yielding 0%, near 0% and below 0%.
Feel free to tune out the lunatic inflation theories you’ve found at nftrh.com over the last few weeks. But if by chance you do want to look, here’s a visual path we have taken to arrive at the barn door, behind which are all those inflated chickens, roosting and waiting. All sorts of animals will get out of the barn if macro signals activate.
Gold led silver ever since the last inflationary blow off and blow out in early 2011. The gold-silver ratio rose through global deflation, US Goldilocks, good times and bad. There was no inflation problem, anywhere. Then early this year silver jerked leadership away from gold and now for the second time the ratio of gold to silver has broken below the moving average that has defined its trend (it did so in 2012 as well).
Why is this significant? Well, try on 2010 for size (see chart below). I for one happily managed the gold-silver ratio up spike in 2008, buying gold miners as they crashed. As gold (monetary, risk ‘off’) topped vs. silver (commodity/monetary, relatively risk ‘on’) we expanded the bullish view to commodities as well. But then came the bottoming pattern that was not a bottoming pattern. To this day I believe that the macro was preparing for a next leg up and some serious new destruction before Ben Bernanke, the “Hero”, sprung into action and ruined the beautiful Inverted H&S pattern that long-time NFTRH subscribers will remember me making a big deal about at the time. Continue reading "A Path Toward Inflation"→
I'm not sure if that if that popping sound is only in my head or happening in the markets? Is the S&P 500 about to pop following Brexit or will it be Fed-induced liquidity rallies as usual? We are long the S&P 500 via a put option spread but will exit at the first sign of failure. Also, the bond market ETF TLT has pulled back to support.
Options in the macro markets like gold, bonds, and currencies are priced for a disaster heading into "Brexit" Here's a way to play the pumped up volatility in the options market using Fibonacci and Elliott Wave Analysis.