December 18, 2019
In the Volatility Report 12.11.2019, I pointed out that the USD was looking bearish – at least for the Intermediate-Term. ” The Hot Money for the last few years has been in the buck. From the 2011 low, a new very long term-bull market is kicked-off. That, however, does not preclude an I-T correction back to test the low of early 2018.” I also tie a weaker dollar to a leading suggestion that stocks are going into a bear market.
This news was coincidental at the secondary top highlighted in the chart used here. “Powell says the Fed is ‘strongly committed’ to 2% inflation goal, a sign that rates are likely to hold steady.”
“Fed Chairman Jerome Powell says the central bank is “strongly committed” to maintaining 2% inflation. The remarks are further indication that the central bank is unlikely to raise rates anytime soon. Powell also draws attention to low labor force participation and middling wage gains.”
“The only way is up…” China continued to surge after the ‘deal… Source: Bloomberg Mixed picture in Europe today with the FTSE tumbling along with DAX as Italy managed gains… Source: Bloomberg US markets were broadly higher led by Small Caps… Since “Phase One” of the US-China deal was supposedly complete on Oct 11th, can you spot the odd one out? Source: Bloomberg All of which began when The […]
US President Donald Trump’s top economic adviser Larry Kudlow told reporters that US exports to China will double under the agreement and that he expects a 0.5 per cent boost to US economic growth in 2020 from the new and updated trade deals signed by the administration.
The U.S. has not had legitimate market in 12 years. What we call “the market” is a crude simulation that obscures the Federal Reserve’s Socialism for the Super-Wealthy: the vast majority of the income-producing assets are owned by the super-wealthy, and so all the Fed money-printing that’s been needed to inflate asset bubbles to new extremes only serves to further enrich the already-super-wealthy.
There’s more: add in the incremental liquidity from the expanded overnight repo of about $50 billion and another $60 billion in T-Bill purchases, and the Fed will inject a total of just shy of $500 billion in the next 30 days. This also means that by Jan 14, the Fed’s balance sheet would have grown by a cumulative $365BN in “temporary” repos, and together with the expanded overnight repos, and the $60BN in monthly TBill purchases, and by mid-January, the Fed’s balance sheet, currently at $4.066 trillion, will surpass its all time high of $4.5 trillion!
Something strange is going on: at the same time that central banks are injecting $100 billion each month in electronic money to crush volatility and ramp markets, a similar amount in hard physical currency and precious metals is literally disappearing.
Take gold: as we reported last week, it was none other than Goldman Sachs which recently laid out the case for gold, saying “gold’s strategic case still strong.” One reason for this is that the same central banks that are “full tilt” printing cash, they have also been splurging on gold, and as a result of “geopolitical uncertainty” there has been a record surge in gold demand by central banks themselves. As Goldman notes, “CBs globally have been buying gold at a very strong pace” and “2019 looks to be a record year for CB gold purchases with our target of 750 tonnes combined purchases likely to be met.”
Great and Many Thanks,
Jack F. Cahn, CMT
Contrary Thinker Since 1989,
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