Long term interest rates and the US dollar
Chris Temple and Cory Fleck chat about the move down in long term interest rates (look at the 10 year note today). What does this means for the US dollar and trends moving into 2016?
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Where you get that from, CFS, is beyond me, because that is one of the key things I’ve referred to numerous times as to how the Fed could blow up the markets. Or are you referring to another “Chris” and other conversations??
I meant the comment to be directed to you Mr.Temple.
Maybe I am getting more cautious in my old age. Perhaps because there are periods when I simply don’t watch the market daily. However, it seems to me we are entering a point in time when six months or a year from now the system will have a derivatives crisis and rather than continue as normal until it might happen and then exit quickly, it might be more prudent to be in the act of leaving at about 10% per month for those investments that will suffer if caught in the market at the blow up point.
Just thinking and trying to plan ahead.
The problem is, of course, the Fed will print and muddle through until they can’t, and the system changes forever.
The politicians will certainly try to blame anyone but themselves and thus might take us to war.
You seem to want to only act in a lineal progression of the status quo.
Temple is right on about the USD.
I would like to add my two bits here on the dollar. Good show by the way, Chris. What I am watching is what looks to be a high probability double bottom being formed on the Euro futures chart which tells me the US dollar will soon start a decline.
It may have begun to retrace already. But more importantly what this is telling me is that oil is set to rise as it so often moves in tandem with the Euro. The Loonie is also at a key inflection point that could conveniently be a near term bottom signalling both oil and gold will start their rise as early as next Monday.
If you look on the hourly charts (futures) you can see that the Loonie and Gold are both showing what appear to be inverse head and shoulder patterns. As mentioned earlier, gold stocks have already begun a stealth move higher and this should be monitored closely.
OK, bear with me here. The reason I mention all this is that on Friday December 4th there is a meeting in Vienna of the OPEC membership and a press conference at 16:00 their time. This meeting may just be the highlight of this week and stands to change just about everything come Monday morning depending on the message sent to the public.
The one holdout in this years major story of surplus oil has been Saudi Arabia and it is now within their power to alter the dynamic of the energy markets and our outlook on inflation with little more than a statement that they will curtail production or come to agreement with other members to collectively restrict supply.
Just words will do it, nothing more is necessary yet. So this is a buy the rumor idea.
But if they do indeed time their statements would it not be convenient that it happens just as the Euro does double bottom and the Loonie is preparing to reverse higher? To be explicit; I think the US Dollar rolls over by Monday morning, crude oil and gold take off abruptly and Treasuries reverse the move up we saw today.
This is just what the Doctor might order if he was in charge of hiking the Federal Funds Rate in mid December. It’s actually perfect. The dollar is over bought and ready to soften up anyway. Ideally, it would be in decline on cyclical basis just as a rate hike was announced.
So what I am seeing is a confluence of signals in metals, currencies, bonds and crude oil that is saying Friday’s meeting could be pivotal for markets and that it should tie in with the upcoming Fed message on the 16th. This should not be ignored. Perhaps this is an idea for a show.
I mean about Friday’s OPEC meeting.
Birdman — did you sneak a peak at my computer while I was finishing up my new issue? Are you spying on me? Because one thing I mention as a possibility is that dollar weakness could come, first, from an oil spike that causes traders to buy oil and sell the dollars they previously bought after shorting oil
Funny Chris, but no, there is no spying happening here. I just see a great trade setting up that will affect pretty much everything at once starting next week. The power is now in the hands of the OPEC Ministers to move the dollar and I think they will do it by leveraging the crude supply. Not so much for the sake of the dollar but to save their own sorry hides and push oil prices back into a more sustainable price range. And all it will take is a marginal production cut of 2 or 3 million barrels a day from the worlds daily demands of 85 million barrels. It’s peanuts in the big picture and easily achieved if the group so chooses. If anything serious will signal inflation to the market then this is going to be it. My bet is they have already been told to cool it and take the pressure off current excess supply. Indeed, one Saudi Minister has already said as much by claiming they would do whatever it takes to stabilize prices. The news conference is coming at 10:00 am NY time if I am not mistaken although I will have to get my trusty atlas out to calculate the time zones. My finger is going to be on the buy button if I hear the words I expect.
PS…..good call Chris! (we are on the same page here).
One last note Chris. To make my case crystal clear regarding a Euro bounce and why that is bullish metals and crude oil I want to refer you to the monthly chart of the Euro.
You will immediately note that it is at the bottom of its current declining trading channel. The bounce should take it all the way back to 127 – 128 to the dollar. This is the single most important chart I am watching right now that is telling us a large change is at hand. At least until the Euro gets back to the top of its trading channel in mid 2017.
It should be ignored at our peril. Here it is in the futures. and it is a beauty…..
The Euro on a monthly chart. Notice that it has reached the bottom of its declining channel and is forming a clear double bottom as it prepares to move higher. Now we all know why the Fed has timed its rate hikes to coincide with the US Dollar on the decline on a cyclical basis.
This is one of the easiest charts we have to read right now. The message is clear as a bell and rates hikes are 100% guaranteed this December 16th. Not only that but I think the Fed will strike while the iron is hot moving more aggressively than most suspect to get hikes in during 2016 and the first half of 2017 while the dollar is still falling.
Few here will believe it. All I can say to them is let the charts do the talking for us. We are about to get a dollar / euro reversal whether the doubters believe it or not.
Birdman, I’ll take the other side of trade. 120 on the DXY in two years.
I am talking about what might happen next week. So that is a short cycle that we can watch on an hourly chart of the dollar. If I am correct the dollar should turn up for the next three trading days before terminating around 100.20 and then turn down by Monday morning. We will know in a few days if I am right or not or I am a complete damned fool. Meanwhile I am already long oil and buying gold miners. I think Christmas is coming early for the precious metals sector.
OH MY, ……AM I reading the above correctly………the bird has turned….THE BOTTOM IS IN. ….I also, think the bottom is in when OWL, wants to diversify into something other than PM……….jmho
Good catch Frank. I was thinking exactly the same thing about Al’s new plan.
Good , I hope we can work together in the future…….best CCF
Of course we can Frank although I plan to be an infrequent poster in the future.
Al, bless his heart and with all due birthday blessings, is a good contrarian indicator!
Temple, that is the best advice I have heard from you this year…………….lol
#1 everybody…… but maybe owls right….. hoot hoot whoo knows..
stick around bird..
now we need Matt back..
GOLD Bottoming………..Peter Hug………kitco……….Dec. 1.
Agreed on the change in focus away from jr miners being a contrarian indicator.
I think Peter Hug is right Frank. 1050 or thereabouts is our current bottom. Also, there is a widespread belief right now that gold miners will not perform in December as tax loss selling pushes prices down. That assumption is at odds with what I am seeing first hand in the sector as PM miners are actually rallying already and they are doing so in advance of the seasonal rise. Could it be the market is positioning for general equities to fall in January and that this year the gold bull will get going several weeks early? I tend to think so and am feeling quite bullish miners despite the overwhelming negativity that prevails on the gold sector itself. To me it looks like there is a disconnect developing between gold price and the companies that actually dig the stuff out of the ground. But that is not so unreasonable really. That same disconnect has happened all the way down since 2011 as gold fell into a bear whereas mining stock was almost literally obliterated. In some cases the miners fell at twice the rate of gold itself. So it is not strange they can rally even with gold behaving as a laggard.
Birds of a feather..Birdman and Owl ?…..something big is going to happen when Birdman goes long miners and agrees with Owl….got to see this play out..my money is on my buddy Owl…he is a hoot and a holler…..
gator……….bird did not agree with al…………al(owl) is out side the box.
owl is going to get his wings clipped………..lol
btw………gators not looking to good……….
ABOUT time for sailfishing………..
Well, if US government care about its industry, it should not allow $ to be this strong. It will drain the US industry of any livelihood.
Well, silver held up well today……………….
OWL……is officially fully funded by the state at the age of 72….He will now be paying particular attention to the inflation index that the social security income benefits will be submitting going forward…………….long live the OWL…………….OH, HAPPY BIRTHDAY YOU OLD BUZZARD…………………..BEST J.
GREEK tax authority…..wants greeks to claim cash in the mattress and pay taxes ….zerohedge
apparently no one gives a hoot about the greeks….. how come….
The Greeks are great people,……we should care, because the bankers are just going to go down the row of every nation and pluck every asset and dollar from the citizens just because they think they have the right to do so.
Tom Woods has a great listen to concerning………..SOCIAL CONTRACT.
the tape is at FSN.
They’re going to raise rates a quarter point and let God sort ’em out, at the same time they’ll support the bond market.
God will sort ’em out all right…………put lighting up their arces…………that will raise them at least a quarter of the way in the direction they should be heading…….
I take it, Chris, you do not worry about any derivatives blow-up because it is too difficult to contemplate.