A Long, Slow Disinflationary Week

Jeez, you can only imagine what next week will bring. For now, let's take a look at the damage and watch to see what the rest of today brings.

Here are four headlines from ZH from just this morning:

Yep, sure looks like the booming "Green Shoots" recovery of 2010 continues, doesn't it? High GDP growth. Jobs everywhere. Wages rising. Bliss, sunshine and lollipops.

And into this economic nirvana, The Fed is poised to raise the Fed Funds rate by a few basis points next month. Uh-huh...

But the "market" sure believes this nonsense and, as such, is bidding up the U.S. Pig against all other fiat junk. This spike in the POSX is leading to massive disinflationary pressures again, not just in the US but in the emerging markets and around the globe.

It feels like a bit of a breather so far today but it's not. Things just aren't down as much as they were yesterday...yet. Take a look at the commodity sector and be sure to notice the predominant color:

And, as we've been anticipating, stocks and bonds are following along, too. The nascent rally in bonds will really get going as we move deeper in November but rates are still down 2-3 bps as I type. And the stock market...whoa, nellie. This is getting really interesting and, again, just as we expected earlier this week.

The S&P fell through and closed below its 200-day MA yesterday and the fact that it has NOT recovered today...so far...it NOT a good sign for all the stockroaches. As I type, it's closing in on its 100-day and, if this continues, it will soon make a run at the 50-day, too. Uh-oh.

From a "traditional" TA standpoint, the key levels appears to be 2020 and 1995 (last 2037). A break down and close back below those levels would invalidate this latest breakout and you could then file it away as perhaps one last failed attempt at getting through stout resistance at 2120. Personally, I'm very much looking forward to seeing what next week brings...

And I'm also very interested to see what the next week brings for Glencore and DoucheBank. GLEN has managed a small bounce today while DB is down again and at new multi-year lows. I'm reading more and more about how the fortunes of these two seem to be tied at the hip. IF THAT'S THE CASE, then all of this commodity deflation stuff is NOT just some isolated, non-event. Instead, this will have SERIOUS IMPLICATIONS for the entire financial system. So, again, recognizing this...How can Mother Fellen even dream of raising rates, sending the POSX through 100 and crashing copper toward $2 and lower?

Oh, and in case you're wondering, here are those two pieces of crap plotted together with GLEN in candles and DB in bars:

Again, the best commodity examples I can give you of this are copper and crude...and they're UGLY:

Alright, then. I see that, as opposed to the conditions when I started typing, I see that things are starting to move pretty fast. The Dow is now down 150 and the S&P is below the 100-day and now at 2029. Crude is now under $41 and falling fast. I think I'd better get this posted and, since as you know I'm currently not coming anywhere near the paper PMs, we'll just save the analysis of them for the podcast later today.

Have a great day but don't stray too far from your computer. There might be some trades to consider before the end of the day.



CPE's picture



4 oz's picture

Have Come to Hate Cycles

Purple Clover's photo.

infometron's picture


Ya baby!

000's picture


Got home last night from working out of town, and stayed in a hotel M, T, W nights and it turns out that there was a sushi bar less than 100 feet away from the hotel. I’m hoping that next week the price of silver will follow the exponential rise in my consumption of 22 oz Sapporo beers, as I had 1 on Monday, 2 on Tuesday, and 4 on Wednesday...

Thankfully the exponential rise did not continue for a fourth day as that would have entailed 16 beers, but I wouldn't mind if the silver price continued on in such a fashion.

LostMind's picture

Pleading the Fufth!

Its a stinky week

Miners are picking up; all mine are flashing green. Just so under water though from last week....

canary's picture


Looking for safty from the rate hike.

Stu's picture

CAF Interview, the QQQ's, and Great Job!

Great Analysis, as usual Craig. It feels as though we are getting close a real inflection point--one way or the other and it feels as though all cards are going to be put on the table.

Can you imagine how emerging markets, and countries reliant on commodity commerce feel when they see there primary source of incomes falter due to the malfeasance emanating from these currency wars? The US and Central Banks are not making global friends.

CAF and www.Solari.com are an acquired taste, but once you sort through it and learn the "language" there is much from which to benefit. It's a bit like Zero Hedge. Such an incredible volume of information that you need to pick and choose your data points, your focus. She is close friends with Dr. Joseph Farrell of www.gizadeathstar.com and he ain't no dummy. Their dialogs are inspiring and his message is "take back the (western) culture".

He has run the channels and links  from WWII and the Nazi's up to the current Secret Space Program. He has written six to eight extremely erudite books on the topic.

Give her a chance--she is both brilliant and perceptive but like I said, she is an acquired taste and it takes time to assimilate the "language". The concept of the breakaway civilization and the trillions inserted into it has merit. This is where the funding for the geo-engineering is tapped. It costs trillions to implement it!

She is also fully aware of said geo-engineering  and the reasons behind it.

Keep a close eye on the Q's going forward. There is a gap that may not be filled.

I'm a mazed that silver drops to $14.20 and so little movement in the options. Actually, I'm not--nothing surprises me anymore!

Steady on...

Turd Ferguson's picture

Forgot to mention


So, we watch gold leave The Scoshe's vault in drips and drabs. Maybe 3,136.046 oz one day. Then 4,273.946 oz the next. In total, their vault is down 65% in seven months.

And now a replenishment? And one of those perfect and precise, one metric ton jobs?? How can anyone with a straight face really believe/trust this stuff???

Geter's picture

RBC au comments with news headlines fwiw

Monday 16th November – Empire Manufacturing Index – RBC: -5, cons: -6.10, Prior: -11.36 – 8:30am EST – A stronger than consensus number (as RBC expects) would likely be negative for gold.

·         Tuesday 17th November – US October CPI – RBC: 0.2%, cons: 0.2%, Prior: -0.2% – 8:30am EST – RBC is in line with consensus at 0.2%; a stronger than consensus number would probably be incrementally negative for gold. 

·         Tuesday 17th November – US October IP – RBC: 0.1%, cons: 0.1%, Prior: -0.2% – 9:15am EST – We are in-line with consensus; a weaker number should be positive for gold.

·         Tuesday 17th November – NAHB Housing Market Index – RBC: 62, cons: 64, Prior: 64 – 9:30am EST – RBC expects a below consensus number, which should be positive for gold.

·         Wednesday 18th November – FOMC Minutes 2pm EST – The Fed went out of its way to make the October FOMC statement much more hawkish than expected. Beyond this, a handful of committee members (including Yellen and Dudley) have come out since then to echo that sentiment. So it would be a surprise if the Minutes did not reflect a committee that is poised to hike in December barring a negative headline in the next few weeks.

·         Thursday 19th November – US Initial Jobless Claims – RBC: 260k, Prior: 270k – 8:30am ET – A lower than before number should be a negative for gold.

·         Thursday 19th November – Philly Fed Business Outlook – RBC: 0, Cons: 0, Prior: -4.5 - 8:30am ET – An above consensus number would likely be negative for gold. 

·         Friday 20th November – Euro Nov flash consumer confidence index–Prior: -7.7 - 10:00am ET – A stronger number than before would likely be Euro positive, US$ negative and therefore incrementally positive for gold.

Turd Ferguson's picture

Excellent new presentation


Excellent new presentation from Brent Johnson:

canary's picture

An eye for an eye

Chuck Butler....Daily Pfennig.

"Renminbi has marked 9 consecutive down days VS the dollar......This scenario sure can't be making the U.S. official happy right now. I say you've not seen anything yet! If the Fed does hike rates to save face in December (though I doubt it), I think you'll see the Chinese come out with HUGE devauation of the renminbi......An eye for an eye. You hike rates and make the dollar stronger, and we'll devalue the renminbi and then see what happen to your forecasts for higher inflation".

Fatso's picture

Brent Johnson presentation ??? Link please

Personally, I am lost, who is he?


realitybiter's picture

You have to be a flipping blind idiot

to not recognized the "black budget."  

exhibit a) the multiple admissions by our own government stating they don't know where TRILLIONS of dollars were spent.  Trillions. 

​or this:  http://www.reuters.com/investigates/pentagon/#article/part2

what the hell do you think the ten plus trillion was spent on?  toilet seats?  ask Bob Fletcher.  The CIAs little hundred billion budget to do whatever it wants is nothing......

General stocks....are insanely ripe to get harvested.  It looks to me like there is no stopping the dow, until it goes through a 5000 pt airpocket 12k or so...all the Yellen yellin' was BS to just keep the carney game goin'  There will be no way to raise in an environment of stock despair.  I'd get long dependz.

Speaking of idiots, listened to John Wells last night and he had a guest speaking about these things (CAF-esque), and he said, "at this point you have to be an idiot to not see the obvious chemtrailing..."  he interviews a lot of people so he gets a lot more info than all of us.  Just sayin'.  Open your mind.  Look.  think.  Where do you think the trillions went?  You don't know.  I am guessing it did not go into cancer research.  I don't think he was using the word idiot to disparage folks, simply stating you have to be willfully ignoring basic logic....aka...idiot.  like ignoring a 2 am PM raid as "normal market activity".....

Swineflogger's picture


Turd doesn't count!

Turd Ferguson's picture

This is a bit dated


Hadn't realized that it had been so long. Need to have him on again soon!


Turd Ferguson's picture

spot on


Just one part of the interminable jam in which Mother Fellen finds herself...

Response to: An eye for an eye
realitybiter's picture

Charlie Rose - Goldsmith

Holy crap Laura Tyson is annoying.  She spouts such bullshit with a voice that makes you want to HariKari yourself  - you can't even listen because the tone and delivery is so painful.  It is physically painful.  I doubt that is coincident.  We can now take 20 plus years evidence of labor participation, wage growth and compare it to her thesis.  She is simply very wrong and he is right.  Like a motorbike, I think the currency flip will highside the US.  It will make no sense to make $5 shoes in Vietnam to sell them to Americans.  The currency will challenge this.   Corporate taxes have effectively been cut in half over the last 20 years...if you look at the percentage of GDP that they contribute.  All offshoring has done is destroy US social fabric AND make the corporations and their senior managers richer.  But hey, our economy will do great if we just import a lot of poor people....

Turd Ferguson's picture

This is remarkable


I won't dissect this as it speaks for itself. Just this...

These idiot kids "demand" that businesses on/near campus must pay their employees $15/hour. Hmmm, let's see. One of their other demands contends that college cost is too high. Well, what do you think these businesses will do in order to pay their employees $15/hour? Maybe raise prices? Thus making the college experience even more expensive! 

Full brainless buffoonery on display:

000's picture


You are on fire this morning unable to suppress the flow of wisdom and common sense contained inside from escaping on to these pages!  You kick ass dude...

realitybiter's picture

The college cost debate

What kills me is EVERYONE - dems, repubs, socialists (BERN) approach the ridiculous expense of college ONLY from a "who pays" standpoint. More loans (from the taxpayer natch), more grants (loans)....how about this - more online colleges that are as expensive as having a gmail account.....oh, the BIG EDUCATION lobby howls. It is disgusting how healthcare and education are not subjected to the benefits of technology and free market economics.

It is obvious that more loans has ONLY increased the expense, so why would you continue down the cliff? Online technology is the solution. Academic profs and administrators can deal with the same reality the rest of us have.....

ratioarbitrage's picture

Backwardation afternoon update

Hi to all cobasis watchers.

It really is a "backwardation update" now, since both December silver (3.5 cents ish) and March silver (just under 0.5 cents) are now continuously in backwardation. March is tracking the cash very closely indeed. Above 14.25 it only touched into backwardation at odd times; now it is continuous. The cobasis is now responding to price more normally as it bobs up and down.

Not much more to report except the longevity of this low: somehow the price is being held down at high-backwardation levels for many more days than is generally possible/thought convenient. I suspect that this is somehow related to the number of days spent at the high around $16.00, perhaps in terms of the number of contracts opened / needing to be closed, or possibly due to the need to push gold down to new lows. Who knows, perhaps they want new lows in both metals.

Nevertheless it is odd, unprecedented and therefore also quite unpredictable.

Anyway, there you have it, 3.5 cents in December and continuous backwardation in March. With just a couple of weeks until First Notice Day for December.

I will only be commenting in the afternoons, also may not notice responses all that quickly (apologies for this) because I often just dip in to write the daily report, but will of course reply to PMs!

CPE's picture


A movement to a more fair and equitable model than we have now

"Keely" should get what she requires!  I think she should have to work to pay for her gender reassignment studies major without relying on my tax revenues to subsidize her student debt.  She should have to buy her home with cash instead or a private and properly priced mortgage rather than a subsidy from .gov for 30 year fixed rate mortgages.  We are ripe for invasion, idiocracy is here, now.

Late edit:  I see RealityBiter has already exposed this bitter truth, h/t!

Dr Jerome's picture

too quiet

It's too quiet our there. This past two weeks of falling action should have seen at least a one bounce. Metals and miners seem capped the past days, with both metals still drifting down. They don't drift down all by themselves after a knife catching opportunity like we have just had.  The weekend is here. I fear that Monday brings a new low in gold with silver soon to follow. The banksters just need to trip the stops below 1072 to get the rest of their shorts covered.

canary's picture

Chuck Butler...troubling

We saw yesterday that the U.S. Monthly Budget Statement was a deficit of $136.5 Billion. As if that's not bad enough.....the components were troubling at the same time. Receipt  were down -0.8% and spending was down 3.9% year on year.......The receipts down? That's tax receipts folks. What means the economy is slowing down.

realitybiter's picture

My Sis is a prof

At a big university....she is constantly traveling to conferences.  She travels more than I did when I was selling Asian ICs to US companies.  Hundreds of millions of dollars of biz.....I'd visit Asia every 3 months.  And she travels more.....She contends "oh, we don't pay for it, the other universities pay for it.  We raise money and offer scholarships..."  

The beauty of the internet is is non-profits have to submit tax forms which are public....so I looked.  Here is the net of one of her orgs:   They have about a million dollar endowment.  Each conf participant pays $400 to attend.  Pays for hotels and meals, travel for the conf administrators...they raise about $300k each year....most of which gets spent on the conf.  They give out 18k in scholarships.  What is that?  6% of annual budget and 1.8% of endowment?  Cui Bono?  NOT the students...It is self-serving joke -  and all these folks are just good libs......the irony is that they are libs as in liberal arts academics AND liberal arts is being destroyed because it has always been a vehicle to teach  people to understand history and art and those things which civilized cultures benefit from.....not industry....and education is now so expensive (these admins and profs are to blame), that we can't afford to just get a lib arts education.  They are destroying themselves and they do not even see it.

If education had followed the path of technology, students would be getting PAID to go to school, not saddled with ridiculous debts.

Turd Ferguson's picture

What so few fail to realize...


The majority of the "blame" for high education costs is, of course, GOVERNMENT FUNDING.

Too many dollars chasing a fixed amount of goods causes a massive inflation. This is Econ 101...which, sadly, has apparently been replaced as a core requirement. Instead, students take "Tree Climbing" and "The Sociology of Miley Cyrus": http://dailycaller.com/2015/08/21/the-daily-caller-proudly-presents-the-dumbest-college-courses-for-2015/

Eliminate or greatly curtail "student loans" and the cost of college will come down...real quick.

Response to: My Sis is a prof
Clarki Stomias's picture

@ Dr. Jerome - too quiet

I agree wholeheartedly with your assessment.  I was just thinking through those exact thoughts and strategizing for the rest of the day. The upside-capping, invisible hand has actually been quite visible this week.  Even with the market downturn, the miners and metals bounce today feels muted.  I think we see some serious ESF/Central bank will being imposed over the weekend and on Monday: both a market pump and a metals smash.  If not, I will be questioning if they actually are trying to allow a market crash (playing chicken with a semi-truck, if you will) just so that they can justify not raising rates in December. 

edit: Of course, all of the above depends on if markets simply end down today or in complete carnage into the close. If it's complete carnage, they will just be trying to stop the bleeding on another 1000 pt down day on Monday. wink 

CPE's picture

Quote of the Day

The world is not a safe space. Grow the fuck up. - Michael Krieger

realitybiter's picture

The last time retailers fell out of bed

like this, was 2007, October, specifically:  10/12/2007, NYT: 

Big chains reported a bleak September yesterday, with sales at stores open at least a year rising just 1.7 percent, the weakest performance in five years, according to the International Council of Shopping Centers, a trade group. 

As a result, more than a dozen retailers, from the luxury emporium Nordstrom to the discounter Target, cut their earnings forecast for the final three months of the year.

yesterday Nordies reported:   Same-store sales rose 0.9 percent, far below analysts’ average estimate of 3.6 percent.....   that is twice as BAD as 2007...

silver doubled in price until the Bear Sterns fiasco....miners not as much but strong...all indexes peaked, final final before the long descent.....but this is not the same...it is much more akin to 2000, but even different than that....the fed has turned the economy into a meth addict.  The  first hit was awesome.  the second good....but now the economy is skinny, sores everywhere, rotten teeth and it does not benefit anymore of what you are selling Mr Fed....   BUT it is all they know....so guess what is coming...free meth for everyone!!!!  Sell your pms if you wish....but history says that is not the thing to do....

Geter's picture

agreed doc

I too have been wondering the same. Been involved in this space for almost 20 years and have never witnessed this kind of trading in the miners with these metals movements of late. Still on the sidelines with my miners hedge position. ...it must be that gamble gamble mentality i've picked up here lately. lol. as much as the fed cannot raise rates in dec, i fear they may be forced to. btw, has anyone heard from the boys "doing gods work" lately on their interest rate call? They've been quite good at predicting those sort of things. F'em. Bring it on...with this dialed in crowd , i'm sure we can pick off some fiats with the coming volatility to add to our stacks.

Syndicate contentComments for "A Long, Slow Disinflationary Week"