Jawboning Fed Goons
The LIES, SPIN and MOPE are thick this morning as a random Fed Goon reports that "rates will soon be rising 1% per year if the economy continues to grow". Uh-huh. Just like the old adage, "if my aunt had nuts she'd be my uncle".
This kind of stuff just cracks me up...and the "market" gobbles it up as Gospel truth because it comes from the omnipotent Fed. As a reminder, the US currently has trillions in existing debt that is being serviced at the shortest maturities with the lowest possible rates so as to minimize the line item "interest on the national debt". If The Goon's forecast was to play out, the "interest on the national debt" would triple or more from around $400B/year to more than $1T/year.
ZH had a great headline summary of the Goonspeak. Let's take them one by one, shall we?
- POWELL: TEST TO RAISE RATES COULD BE SATISFIED AS SOON AS SEPT. -- yep, I suppose that's true if God Himself comes down and starts shopping at Walmart
- POWELL SAYS HIS FORECAST CALLS FOR RATE RISES IN SEPT., DEC. -- Attaboy. Good for him and his cute little forecast
- POWELL SAYS ODDS FOR SEPT. RATE RISE IN 50-50 RANGE -- whatever
- POWELL: FED AND MARKETS ARE GETTING INTO CLOSER ALIGNMENT -- there's a stunner...the Fed IS the market
- POWELL: DOLLAR IS STRONG BECAUSE U.S. ECONOMY IS STRONG -- this shows either his abject stupidity or outright lies. Anyone with a brain knows that the Pig is only stronger due to ongoing, massive QE in Japan and Europe.
- POWELL: THERE'S RISK UNEMPLOYMENT MAY FALL FASTER THAN FORECAST -- as more participants just give up and quit looking, the LFPR drops to fresh 40-year lows and drags the unemployment rate even lower. Classic Goon speak. Gosh how I despise these people.
- POWELL SAYS SOME MARKET RISK HAS SHIFTED TO ASSET MANAGERS -- the height of arrogance
- POWELL: NOT CONCERNED HIGHER VOLATILITY WILL HARM ECONOMY -- was this guy born yesterday?
- POWELL SAYS HE DOESN'T SEE A BUILD-UP OF AN ASSET BUBBLE -- by staying in his ivory tower his entire life, he obviously failed to notice all of the past Fed-inflated bubbles
- POWELL SAYS HE'S NOT PARTICULARLY TROUBLED BY EQUITY VALUATIONS -- nope, not Goon Powell. All looks fine to this clown. Record high valuations be damned
Not surprisingly, the headline-chasing HFT algos have picked up this mountain of BS and run with it. At one point earlier, the POSX was up nearly a point and a half and, of course, this is all due to "the strong US economy" according to Goon Powell. The Pig is still up a point as I type which means the euro is just getting smoked. See below:
The yen is down, too, but still within the range we've been watching:
And, of course, having the yen down explains why gold is down (yen in candles, gold in bars):
Meh, whatever. None of this affects my conviction that the next sharp move in the metals is UP, not down. Today's action only exacerbates the extreme nature of the Spec shorting, particularly in silver. Just yesterday, we saw another ATH in Comex silver open interest and there's no doubt in my mind that today will bring another. PLEASE keep in mind that the last time we "predicted" a short squeeze was April 15 and the actual squeezing didn't begin until April 24. Just remain patient. Have another look at the chart below. Whether you start the trendline on March 17 or 18, price is still near the line and very likely presenting an opportunity at this very second to anyone willing to gamble in The Casino or add some physical.
And in gold, look at the complete inability to break price down below $1175-1180 over the past two months. I suspect more of the same here and...I CAN'T STRESS THIS STRONGLY ENOUGH...major declines DO NOT begin from a CoT structure like the one we have at present. Therefore carpe diem, mon frere.
Just a few links this morning. I found this at ZH in the "contributor" bar. Pretty interesting stuff with some rather intriguing charts: http://www.zerohedge.com/news/2015-06-22/container-shipping-rates-china-us-europe-collapse
More terrible news of out Eastern Europe: http://news.yahoo.com/us-pre-position-heavy-weapons-along-natos-eastern-001730545.html
And, as we've considered the audacity of the Fed Goonspeak today, this new post from Denver Dave is invaluable: http://investmentresearchdynamics.com/new-home-sales-for-may-statistical-measurement-failure/
Have a great day. More later,