TFMR Podcast - Friday, September 9


After their obvious and deliberate attempt to manipulate the bond market these past 48 hours, I think it has become clear that The Fed does, indeed, intend to raise the Fed Funds rate when they meet in two weeks. Why they are doing this and what they hope to accomplish is what we attempt to explain in this podcast.

I've claimed all along that The Fed CANNOT raise the FF rate, if anything because they would flatten the yield curve and worsen the economy even more. This manipulative move in treasuries is quite clearly an attempt to raise long rates in order to give The Fed "room" to raise short, when taken together, there is no discernable change to the slope of the curve. The move to raise long rates also helps the BoJ and the ECB, as we explain in this podcast.

The proof is in the pudding and you can see what is happening in these three charts:

But The Fed is playing a VERY dangerous game in their attempts to manage EVERY market. They've attempted to directly and indirectly influence the stock market since February 11 of this year. We'll have to see now if their gamble pays off.

And with rising rates and a rising POSX/USDJPY, you can be assured that the metals are going to continue to feel considerable pressure. Gold might/should hang in there better than silver as it will begin to receive some "safe haven" bids. I think a tradable low is coming again soon. Silver on the other hand may soon see .50 fail in a test of .00. IF THAT HAPPENS...and it doesn't necessarily HAVE TO, it's just a possibility...the chart below shows that we might have a tradable low there, too.

Anyway, this is all VERY complex and I don't know if I did a decent job of explaining myself. If you find all of this confusing, we can always try again on Monday. In the meantime, there are those out there that have claimed that any further rate hikes will bring about financial catastrophe and derivative failure and market collapses. At this point, given what we've observed over the past 48 hours, I'm afraid we're about to find out if those people are right.

Have a nice weekend.



Sep 9, 2016 - 9:55pm

Great podcast

Way to go , "Turd", another excellent podcast.

I always feel "more intelligenter" when I listen to you - even though I don't understand half of what you say.

The half I do understand makes a lot of sense so I'm just going to have to give you the benefit of the doubt for the other half.

Boy, sometimes I wish I had gone to business school...

Sep 9, 2016 - 10:01pm

That was an amazing synthesis...

...Of motive and opportunity in 26 minutes

Im not sure the Fed even knows what they'll do yet but getting the 30s out of the way gives them a less destructive outcome if they do raise. Better to stop out the longs gradually than pop em with a surprise move.

In 15 years of trading this was one of the most orderly disaster days I can recall. As an aside, Tesla was not allowed to crap out today for some reason. Methinks an "interested party" didn't want to have Musk get margined out of SolarCity and SpaceX just yet.

This was the quality and depth of Podcast that Rickards wishes he could give.

Sep 9, 2016 - 10:05pm

Loud & Clear, Craig

Craig, I understand what you are saying. You made it crystal clear (even with my ADHD). It will be very interesting to watch the "Masters of the Universe" play this game. And there're doing it in September ! Not good odds for them .

Sep 9, 2016 - 10:23pm
Libero Lugnut
Sep 9, 2016 - 10:26pm

Stocks tank but gold just softens

I believe that the nuclear test event in North Korea is more responsible for all stocks falling today (and PM stocks even moreso). The threat of a 1/4 point rise in interest rates, which has been expected and promised for so long, is what everyone talks about, but North Korea is seriously serious, -this is nuclear stuff. Unlike Iran, they are doing it and unlike Iran, they are led by a madman.

And note that gold fell only .7 %, a blip.

Have a good weekend everyone.

Sep 9, 2016 - 10:43pm

Great Podcast

Great podcast Turd. I was anticipating this all day and you delivered big time. Thanks!

- H.

Sep 9, 2016 - 10:46pm

Here's a trade to contemplate

Wells Fargo Bank... If you haven't heard, they were slapped with a 186 million dollar fine. They were caught creating fictional accounts from existing members without there knowledge, creating fraud on a scale so large that they would pan-fry my ass in a skillet if it were me. This can't be comfortable as a member of "wells there it goes bank" Short the shit out of this bank !!!

Sep 9, 2016 - 11:03pm


Well........Just recovering from my 3rd surgery in 14 months, and tonight was the night I felt like getting my head solidly back into the game. Man did I pick a stellar podcast to sink my teeth into for a return listen. Excellent....!Excellent.....! work Turd.

Been building up some dry powder, and will be looking to bag a bit more phys. gold, and some silver miners. Most likely Fortuna Silver, and Southern Silver Exploration Corp.

I was joking with one of the guys I work with, that after this many quite invasive surgeries, I consider myself the modern remake of the hit T.V. series "The Six Million Dollar Man". Except in my case it's more like the, "Six Thousand Dollar Man", and instead of adding bits and pieces to me.....they keep taking bits and pieces away.

@johnofg- excellent post with A. Macleod. I always make time for him.

Sep 9, 2016 - 11:10pm

Thank you Craig

Always thoughtful, always rational. I'm shocked they are going to hike two months before an election, but here we are. I'm lucky I'm set with my positions and I'm just going to wait it out. Should be interesting.

Joseph Warren
Sep 9, 2016 - 11:20pm


Yes, I see your point & had thought about that too.

But, there's also the matter of rising rates impacting the thus strengthened US dollar pegged yuan and causing them to do a devaluation in response to that. There's the whole issue of what rising rates will do to the valuations of existing bonds and to derivatives lurking out there. Combine that with the short time till the US presidential election, and I just don't see them taking that risk now. If they did make such a move, what would compel them to do this now rather than in 2017 ?

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Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
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9/4 8:30 ET Foreign Trade Deficit
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8/5 9:45 ET Markit services PMI
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