Questioning The Generally Accepted Narrative

Tue, Jan 17, 2017 - 12:02pm

One of the primary themes that we've been repeating is that 2017 is going to be a wildly unpredictable year. To that end, today we begin what might be a wildly unpredictable week. Buckle up.

So, let's see. What are some of the primary tenets of the heavily-promoted "Generally Accepted Narrative"?

  1. Major US deficit spending will promote economic growth
  2. This economic growth will allow The Fed to hike the Fed Funds rate 3-4 times
  3. Rates on the long end will rise, too, as "the bond bubble bursts"
  4. All of this growth and higher rates will prompt a huge rally in the dollar
  5. And the US stock market will charge toward 25,000 on the Dow.

Let's check in on these as we've now reached the second half of January.

"Major US deficit spending will promote economic growth. This economic growth will allow The Fed to hike the Fed Funds rate 3-4 times." -- Well, we'll see about this. There have not been any specific proposals put forth yet by Trump and some of the economic and confidence numbers are already beginning to roll over. Here's today's economic datapoint for your consideration: https://www.zerohedge.com/news/2017-01-17/trumphoria-fades-empire-fed-ma... And, regarding The Fed, let's not forget these two charts:

"Rates on the long end will rise, too, as "the bond bubble bursts". Well, this isn't working out so well for the Narrative Pushers. As we've been observing, long rates are moving lower as bonds are bought, not sold, and the so-called "bond bubble" is alive and well. As you can see below, since the first of the year, the rate of the 30-year Long Bond has fallen from 3.11% to 2.93% and now threatens a complete reversal back to where it was before the US election. Yes, we will continue to watch this very closely in the weeks ahead.

"All of this growth and higher rates will prompt a huge rally in the dollar." And here is where The Narrative Pushers are really failing. The conventional wisdom holds that the POSX is going to 110+ as the euro and yen both fade under the weight of their own issues. Well, not so fast my friend. As you can see below, The Pig has already fallen rather dramatically in January and, if it falls back under 100, the Pig bulls are really going to have to start questioning themselves.

"And the US stock market will charge toward 25,000 on the Dow." Hmmm. Not so much. Maybe Bob Pissonme and the rest of the CNBS cheerleaders should concentrate on getting to 20,000 before focusing upon 25,000? As you can see below, the "stock market" has been stuck now for over a month.

We see The Generally Accepted Narrative failing as it pertains to Comex Digital Gold and Silver, too. How many forecasts did you read in December that called for sub-00 gold? How many supposed analysts and wave-counters were projecting or silver? Instead, that ain't working out so well. And why? Because the analysts and technicians all fail to understand that there is no "market" for "gold". Instead, we have HFT driving funds into and out of Comex Digital Gold exposure, primarily following changes to the USDJPY. Who cares of we're in subcycle F of major downwave 3? None of that mumbo-jumbo makes a rat's ass bit of difference if the USDJPY is indeed headed back toward 100.

So be of good cheer but expect a wildly unpredictable 2017. As we've seen so far, the predicted market moves of The Generally Accepted Narrative for 2017 are far from being a fait accompli.

TF

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Key Economic Events Week of 1/13

1/14 8:30 ET CPI
1/14 9:00 ET Goon Williams
1/15 8:30 ET PPI and Empire Fed
1/16 8:30 ET Retail Sales and Philly Fed
1/17 8:30 ET Housing Starts
1/17 9:15 Et Cap Ute and Ind Prod

Key Economic Events Week of 1/6

1/7 8:30 ET US trade deficit
1/7 10:00 ET ISM Services PMI
1/7 10:00 ET Factory Orders
1/8 8:15 ET ADP employment
1/9 8:00 ET Goon Chlamydia speech
1/9 1:20 ET Goon Evans 2:00 ET Goon Bullard
1/10 8:30 ET BLSBS
1/10 10:00 ET Wholesale Inventories

Key Economic Events Week of 12/16

12/16 8:30 ET Empire State Manu Idx
12/16 9:45 ET Markit flash PMIs Dec
12/17 8:30 ET Housing Starts and Bldg Perms
12/17 9:15 ET Cap Ute and Ind Prod
12/19 8:30 ET Philly Fed
12/20 8:30 ET Final guess Q3 GDP
12/20 10:00 ET Pers Inc and Spending
12/20 10:00 ET Core Inflation

Key Economic Events Week of 12/9

12/10 8:30 ET Productivity and Unit Labor Costs
12/11 8:30 ET CPI
12/11 2:00 pm ET FOMC fedlines
12/11 2:30 pm ET CGP presser
12/12 8:30 ET PPI
12/13 8:30 ET Retail Sales
12/13 10:00 ET Business Inventories
12/13 11:00 ET Goon Williams speech

Key Economic Events Week of 12/2

12/2 9:45 ET Markit Manu PMI
12/2 10:00 ET ISM Manu PMI
12/2 10:00 ET Construction Spending
12/4 9:45 ET Markit Services PMI
12/4 10:00 ET ISM Services PMI
12/5 8:30 ET Trade Deficit
12/5 10:00 ET Factory Orders
12/6 8:30 ET BLSBS
12/6 10:00 ET Wholesale Inventories

Key Economic Events Week of 11/25

11/25 8:30 ET Chicago Fed Nat'l Idx
11/25 7:00 pm ET CGP speech
11/26 8:30 ET Advance Trade
11/26 9:00 ET Case-Shiller home prices
11/26 10:00 ET New home sales
11/26 10:00 ET Consumer Confidence
11/27 8:30 ET Q3 GDP 2nd guess
11/27 8:30 ET Durable Goods
11/27 9:45 ET Chicago PMI
11/27 10:00 ET Pers Inc & Cons Spndg
11/27 10:00 ET Core inflation
11/27 2:00 pm ET Beige Book

Key Economic Events Week of 11/18

11/19 8:30 ET Housing Starts & Bldg Perms
11/20 2:00 ET October FOMC minutes
11/21 8:30 ET Philly Fed
11/21 10:00 ET Existing Home Sales
11/22 9:45 ET Markit November Flash PMIs

Key Economic Events Week of 11/11

11/12 Three Fed Goon speeches
11/13 8:30 ET CPI
11/13 11:00 ET CGP on Capitol Hill
11/14 8:30 ET PPI
11/14 Four Fed Goon speeches
11/14 10:00 ET CGP on Capitol Hill
11/15 8:30 ET Retail Sales
11/15 8:30 ET Empire State Manu Index
11/15 9:15 ET Cap Ute and Ind Prod
11/15 10:00 ET Business Inventories

Key Economic Events Week of 11/4

11/4 10:00 ET Factory Orders
11/5 9:45 ET Markit Services PMI
11/5 10:00 ET ISM Services PMI
11/6 8:30 ET Productivity & Labor Costs
11/6 Speeches by Goons Williams, Harker and Evans
11/8 10:00 ET Consumer Sentiment
11/8 10:00 ET Wholesale Inventories

Key Economic Events Week of 10/28

10/30 8:30 ET Q3 GDP first guess
10/30 2:00 ET FOMC fedlines
10/30 2:30 ET CGP presser
10/31 8:30 ET Personal Income & Spending
10/31 8:30 ET Core Inflation
10/31 9:45 ET Chicago PMI
11/1 8:30 ET BLSBS
11/1 9:45 ET Markit Manu PMI
1/1 10:00 ET ISM Manu PMI

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