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 1/11

1/11 12:00 ET Goon Bostic speech
1/12 10:00 ET JOLTS job openings
1/13 8:30 ET CPI
1/13 1:00 ET Goon Brainard speech
1/13 2:00 ET Beige Book
1/14 8:30 ET Import price index
1/14 12:30 ET Chief Goon Powell
1/15 8:30 ET Retail Sales
1/15 8:30 ET PPI
1/15 9:15 ET Cap Ute and Ind Prod
1/15 10:00 ET Business Inventories

Key Economic Events Week of 1/4

1/4 9:45 ET Markit manu PMI
1/4 10:00 ET Construction Spending
1/5 Georgia U.S. Senate election
1/5 10:00 ET ISM manu PMI
1/6 US election certification
1/6 8:15 ET ADP Employment Report
1/6 9:45 ET Markit service PMI
1/6 10:00 ET Factory Orders
1/6 2:00 ET December FOMC minutes
1/7 8:30 ET Trade Deficit
1/7 10:00 ET ISM service PMI
1/8 8:30 ET BLSBS
1/8 8:30 ET Wholesale Inventories

Key Economic Events Week of 12/21

12/21 8:30 ET Chicago Fed
12/22 8:30 ET Q3 GDP final guess
12/22 10:00 ET Consumer Confidence
12/23 8:30 ET Durable Goods
12/23 8:30 ET Personal Inc and Spending
12/23 8:30 ET Core Inflation

Key Economic Events Week of 12/14

12/15 8:30 ET Import Price Index
12/15 8:30 ET Empire State Index
12/15 9:15 ET Cap Ute and Ind Prod
12/16 8:30 ET Retail Sales
12/16 9:45 ET Markit flash PMIs Dec
12/16 10:00 ET Business Inventories
12/16 2:00 ET FOMC Fedlines
12/16 2:30 ET Chief Goon Powell presser
12/17 8:30 ET Philly Fed
12/18 8:30 ET Current Account Deficit
12/18 10:00 ET LEIII

Key Economic Events Week of 12/7

12/8 8:30 ET Productivity & Unit Labor Costs
12/9 10:00 ET JOLTS jop openings
12/9 10:00 ET Wholesale Inventories
12/10 8:30 ET CPI
12/11 8:30 ET PPI

Key Economic Events Week of 11/30

11/30 9:45 ET Chicago PMI
12/1 9:45 ET Markit Manu PMI Nov
12/1 10:00 ET ISM Manu PMI Nov
12/2 8:15 ET ADP Employment Report
12/3 9:45 ET Markit Services PMI Nov
12/3 10:00 ET ISM Services PMI Nov
12/4 8:30 ET BLSBS
12/4 8:30 ET US Trade Deficit Nov
12/4 10:00 ET Factory Orders

Key Economic Events Week of 11/23

11/23 9:45 ET Markit flash PMIs
11/23 1:00 ET Goon Daly
11/23 3:00 ET Goon Evans
11/24 9:00 ET Case-Shiller home prices
11/24 10:00 ET Consumer Confidence
11/24 11:00 ET Goon Bullard
11/24 12:00 ET Goon Williams
11/24 12:45 ET Goon Chlamydia
11/25 8:30 ET Q3 GDP 2nd guess
11/25 8:30 ET Durable Goods
11/25 10:00 ET Personal Inc and Spend
11/25 10:00 ET Core inflation
11/26 US Market holiday

Key Economic Events Week of 11/16

11/16 2:00 pm ET Goon Chlamydia
11/17 8:30 ET Retail Sales
11/17 8:30 ET Import Price Index
11/17 9:15 ET Cap Ute and Ind Prod
11/17 10:00 ET Business Inventories
11/17 1:00 pm ET Chief Goon Powell
11/18 8:30 ET Housing Starts
11/18 1:20 pm ET Goon Bullard
11/19 8:30 ET Jobless claims
11/19 8:30 ET Philly Fed

Key Economic Events Week of 11/9

11/9 1:30 pm ET Goon Mester
11/10 7:30 am ET Goon Kaplan
11/10 10:00 ET JOLTS job openings
11/10 10:00 ET Goon Rosengren
11/11 Veteran's Day. Bond market closed.
11/12 8:30 ET CPI
11/12 11:45 ET Chief Goon Powell
11/12 2:00 pm ET Federal budget
11/13 7:00 ET Goon Williams
11/13 8:30 ET PPI
11/13 8:30 ET Goon Bullard
11/13 10:00 ET Consumer sentiment

Key Economic Events Week of 11/2

11/2 9:45 ET Markit Manu PMI
11/2 10:00 ET ISM Manu PMI
11/2 10:00 ET Construction Spending
11/3 U.S. Election Day
11/4 November FOMC begins
11/4 8:30 ET ADP jobs report
11/4 8:30 ET US Trade Deficit
11/4 9:45 ET Markit Services PMI
11/4 10:00 ET ISM Services PMI
11/5 8:30 ET Productivity & Unit Labor Costs
11/5 2:00 ET FOMC Fedlines
11/5 2:30 ET Chief Goon Powell presser
11/6 8:30 ET BLSBS
11/6 10:00 ET Wholesale Inventories

Forum Discussion

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