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.