Grandma Janet's Tea Party
The lousy US economic news continues today as both "orders for durable goods" and "consumer confidence" were reported to be ugly. Will this impact Mother Fellen and Her Goons as they begin their latest FOMC Bridge and Tea Party?
Of course every one of Mother Fellen's tea parties begins with the presentation of the doilies. A source inside The Goon Squad confirms that this month's winner was crocheted by Jeffrey Lacker of the Richmond Fed. Lacker gets the ceremonial first prize of a banana as well as the adulation of Mother Fellen, herself, for his fine work shown below. Great job, Jeff!
After this afternoon's tea and this evening's bridge party, they'll all get down to work tomorrow morning when they craft the latest installment of "the most important FOMC Fedlines...ever". Will there be a rate hike? Maybe just a teeny-tiny 1/8 of a point? Don't count on it. However, DO count on some type of jawboning verbiage that will set what remains of LIESman's hair on fire. Maybe some changes to the rate expectation scatter-plot or perhaps the inclusion of the word "when" in a key paragraph. Either way, after the debacle of September, you must expect some type of "hawkish" nonsense. Enough to rally the USDJPY and drag stock futures up with it. As you can see below, though it's not always a direct 1:1 and tick-by-tick correlation, the HFT-driven illusion of markets remains.
A key indicator of what is likely coming continues to be crude. For over a year we've chronicled how crude has its own HFT-driven correlation with the euro and that trade is, no doubt, pounding crude lower again now. Regardless, crude falling back toward $40 as it did last summer is once again a clear indication of the disinflation bias trade. And what is the key driver of this trade? A rising POSX/Pig. And what did we just lay out above as the likely outcome of the current FOMC? A rising POSX/Pig. So, for ole Turd, this current crash of crude is telling us what is to come. Namely, more downside and more disinflation bias.
And it's not just crude. It looks like you can see this coming in things like platinum and copper, too:
So, what levels must we be watching in our precious gold and silver? See below. Any break UP and through the respective 200-day MAs would be a positive development. More likely is a break down and through the black support lines drawn. By doing so, The Cartel Banks would speed an exodus of the late-coming, momo-chasing specs.
So, hang in there and keep the faith. Turd has not yet "taken one for the team" by buying puts but we'll keep you posted. We may just wait for price to fall back to the trend arrows shown above and then buy calls, instead. We'll see.