Are low interest rates really here to forever?
In these slow market days we have the chance to explore a couple topics. Today we touch on the overwhelming narrative from pundits of zero/low interest rates will be here forever. While the Fed has been focused on the equity markets, we are seeing rising long term interest rates plus the potential for a jump in overall commodity prices and the US dollar staying on the low side of its range. This is a very different environment from the past few years.
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Snot so..
Just don’t lick the snot……………….
I feel kind of crude today, ….been working with the plumber, installing a water heater.
Tell, billy bob…..that he is not the only one to dig dirt………lol
Oh, we had a broken water pipe in the ground…….which qualifies for digging dirt…….I feel like the politicians , ….digging dirt ….
Yes, So. Al. You are incorrect.
Don’t make this difficult. As my grand daughter says, Duh!
19.24 Trillion is the current debt. Each 1/4 point raise costs $47.5B. Each 1% increase
costs the country $190B in interest per year.
So if the fed raises the rates to say 2% that’s nearly 0.5 Trillion added to the deficit each year.
The country is broke. Period. It can NOT raise interest rates except for a token signal to the forex and bond markets.
Take it to its logical conclusion, can they raise rates to say 10%. Answer is 1.9T per year in added debt.
It will never happen fellas. Don’t forget the basics.
Hillary for pres. would be the same as it is, except worse.
Trump could be a move for the better….if the “BASTARDS” don’t JFK him.
Whats wrong with the US population, you have been voting in the same club for decades & nothing gets better……Take a gamble & vote for Trump.
A choice of liar C or liar D! Great choice!
I will be writing in “None Of The Above” for my vote.
That is the problem…….C-D RATES to low….liar returns…liar debt, liar economy, liars everywhere.
Lot of people feel that way, Mr I
To many people in our society on entitlements!
You really think so Lewis?
Of course you are correct!
ROME 201………
I don’ t understand your commentOOTB, unless you are referring to the “United states of Europe” about to be inflicted on the EU.
Ayone thinking of voting against Brexit should read:
http://www.express.co.uk/comment/columnists/frederick-forsyth/651377/Brexit-referendum-EU-never-meant-to-be-democracy-says-Frederick-Forsyth
I know it’s old, but it briefly examines giving up democracy.
……..my thinking was that , USA, is current day the “ROMAN EMPIRE”………….which we have stated many times.
The entitlements, were handed out to the Roman citizens ,as in present times. The USA is just a repeat of the OLD ROMAN EMPIRE.
Except, it does not hold on to much territory and only half-fights any wars.
I’ll be in Rome in a couple of weeks… Some of its 2000 year old buildings are still standing; unlike US structures !
Tony,
The nation and population as a whole relinquished its responsibility to act and think like adults based on responsibility and integrity decades ago.
Its now 300+ million spoiled children that wake up everyday seeing if they can top yesterdays abomination in whatever form.
The two tier system is actually operating just like it was build to be in its operational form……the Capstone Sociopathic Matrix at the top of the heap and the South Park gulag of mindlessness muck at the bottom.
The adults exited the stage many moons ago. Stick around Tony, the ending to this movie should be one for the ages.
V
Fiscal spending is much better than monetary spending, but it is still irresponsible.
Any good economist will tell you, the socialist spending needs to be cut, with TAXATION being cut, if you wish to grow the economy.
The path we are on is the Zimbabwe/Weimar pathway to hyperinflation.
CFS..Aint that the truth.
But it is nothing a good revolution couldn’t fix.
Alas, that would take sane citizens, instead of a bunch of gimme, gimme, give me’s.
There are not sane citizens………when the retired educators……get $100,000 in retirement benefits.(Chicago educators)…..and it take 386,000 people to fund 8700 retirees……the system is not SANE.
I clearly retired from the wrong educational system!
Indiana school systems ….balance the budget……….and I think you were an Indiana professor……..correct me if wrong………..
Yep. Good memory.
One day, I would like to buy you a beer or glass of wine , if, you get to Indy.
Only, with the thought of Hoosier Hospitality……..
I was just down in Indy a couple of weeks ago, but I donT drive any more. I can pass the driving test and have a valid driving license in two countries but my sight made me give up driving ten years ago.
Thanks for the offer, but if you make it up to west Lafayette, Indiana, I’ll happily dig up some wine from my basement for you.
I will selling my house there in the next year or two and splitting my time between Europe and California (Sonoma…..wine country!)
My nomadic days are too exhaustive.
Appreciate the offer…………My wife is a Boilermaker.
My father in law was a John Wooden member.
…….I would enjoy an evening in Lafayette and splitting a bottle , which I believe would be the highest in quality , reflecting the acquirer..
Gotta love Austrian politics AND economics right now. Did you see the swing to the right in Austria’s most recent election?
Low interest rates will be gone soon when Trump becomes President. We have lived in a managed economy for too long where the government has become Big Brother for all the citizens and this is not sustainable any longer. The pendulum has swung too far to the left and it is now time for it to stop overcorrecting and move to the right. The government can no longer afford to look after every Tom, Dick, and Harry. Low interest rates were their last bullet to keep the socialist agenda alive. Most of our society today stems from Norman Lear’s program ” All In The Family” when we had become too right wing. Now that we have over corrected with political correctness it is time to return to the mean. DT
But DT, TRUMP has made his money on using other people’s money, I do not see him voluntarily calling for raising interest rates.
CFS……….OPM….other peoples money……….is real estate 101
I think TRUMP knows, that far interest rates …..everyone wins……………no “zero”
far……..to fair
People have to be insane….to think anyone is going to win with zero or negative
CFS, Trump knows that The Government is fat, bloated and full of people who can’t make it in the real world. He doesn’t live on fantasy island with tattoo following him around. He understands how businesses become bankrupt and he will chop spending fire the fat and make people accountable for their decisions. DT
But he does live in fantasy.
That’s what he relies on. He really is not that good a businessman. A much better showman.
CFS, I never expected you to understand anything other then your preconceived ideas, some people can’t and won’t see the obvious. DT
Happy not to disappoint you. DT
I took yesterday off………..and I see the ratings were down….not much conversation..LOL
Even a slow day for the BIRD………….
Laugh of the day……………CFTC….was unaware of the gold rigging By DB….until ten days ago………………….zerohedge
Bart “Vanpire” Chilton……………..wonder , where they get these morons……..
IS, Bart , related to BUSH……….
CCF, you are right, that may be lie of the year category.
Marty……….the thread of the weavers, is coming unraveled……….lol
163 HEDGE FUNDS……………….long APPLE………….William Tell, where are you.
163 soon to be crispy toast, hedge funds.
Maybe some nasty Austrian named Gessler got him.
Al, Cory and Doc,
You men really got to the meat and potato’s today! Great discussions about what’s really going on. I agree the world is about to start major infrastructure projects. The EMs and commodities are close to starting a 50s style bull run. And I do think Trump would be best suited for the task at hand. I couldn’t trust many in congress in handling the new gold standard that’s about to roll out. These folks have no clue about being fiscally responsible. It’s pretty much a guarantee that Hillary won’t be president. The Sanders folks will move to Trumps camp. Hillary’s legal issues won’t go away.
Cory, you deserve the “most improved award”.
I agree Trump will be good for America. Good point Doc on spending. And Big Al is right on too. Good show!
Trump is sweeping and Cruz and Kasich are Weeping! DT
I think what we are seeing is something that happens a lot in history desperate times produce the men that are needed to keep our hopes alive. Similarly FDR in The Great Depression and Winston Churchill during The Second World War.DT
Build the Wall. LOL
Who is going to pay for that wall guys?
I think the Clinton foundation should foot the bill. LOL!
Hey Doc.
Truely Truely, are you giving upon the gold metal correction at all?
Give me some time frame on gold? thank you sir.
Cruz and Kasich want a contested convention, losers always want another chance that they don’t deserve. DT
As far as I know, money for infrastructure spending is already in the books. I posted an article a couple months ago where Fed Reserve money was going to be diverted to just that. The issue was that no one in Congress could figure out where to get the money for the projects. And they finally decided to take it from the Federal Reserve. Now, it wouldn’t surprise me if that move would be deemed successful and Congress then would decide to do even more of the same…..
The U.S. Government does not operate as you describejohngeneric.
Mark Levin compares Trump with Reagan:
Congress allocates money for specific projects
The treasury finds the money by taxation, fees, or by issuing Treasury notes or bonds.
I am unaware of any specific federal projects authorized by Congress which have not been worked upon.
Much of US infrastructure, however, is not Federal, but state infrastructure.
Sure thing. Jim Grant;… most wrong on everything award. He has been touting gold for as long as I recall. Smart guy but all blather.
Yes,he has been touting gold for a long time,like many others.
I like Jim Grants thoughts on interest rates.
Sure thing Cory, good questions. I enjoyed today’s show. I am still a Hillary fan and I realize nobody here likes her much but she is far preferable to that Maverick D.Trump who might see the US as a country he can remold in his own image.
Both the main candidates are headstrong and single minded. The difference is that Trump does not strike me as conciliatory or cooperative. He shoots from the hip and writes his own script as he goes.
Could he be any further away from President Obama?
I just don’t see Trump as a Presidential candidate. There is very clearly only one good option therefore and sorry to say but it will have to be the status quo choice which means another Clinton in office.
I would have voted for her in any case no matter who the other choices were!
Very nice pop today in St George Mining,
Pity I only have a minor holding in it, but still it was a spec bet on my behalf that is now up over 200 % for me.
That should be over 100 %…(not 200 % as I wrote above)
Cheers.
I should also mention it wasn’t a pick of mine. I can’t take the credit.
It was from a mate’s advice who reads here occasionally, but listens here mainly for Rick A’s thoughts.
Thanks again for yet another great tip Andy, much appreciated.
Cheers.
I missed the move in the Australian miners,2015 i planned to buy them later..
Copper managed to close above the 5 day EMA one more time…
The Loonie had its highest daily close in about ten months…
New YTD high for the Russell 2000…
Slate’s Trumpcast
http://www.slate.com/articles/podcasts/trumpcast.html
A quasi-daily podcast from Slate that sets out to understand the real Donald Trump. Jacob Weisberg, chairman and editor-in-chief of Slate, will be talking to historians, psychiatrists, and other experts to help explain who this man is, and why this is happening, right now, in the United States of America.
recommended!
There is a longer interview with Rick Ackerman on TalkDigitalNetwork that some might find interesting as he covers a lot more detail about his outlook on the deflationary bust he thinks is coming…..It is a 30 minutes interview.
Talk Diigital Network — Rick Ackerman on bonds, debt, deflation ad gold.
http://financialsurvivalnetwork.com/2016/04/big-deflationary-trend-rick-ackerman-april-26-2016/
Silver had its highest daily close in almost a year and now looks like it’s going much higher very soon. The RSI confirmed the action with a new high for the current rally while the ADX hit its highest uptrend strength reading in almost two years. Recent volume is the highest it’s been in three years.
Nice chart,Matthew.
I mentioned on the weekend I was going aggressively after speculative silver stocks this week,
Mebbe I’ll be right? Or not?
Lets see how it plays out.
Cheers.
One of the spec’s I bought was SVL.
It doubled in price (not hard at its level lets be honest)
I sold out my initial position.
Now its a free spin, whether it doubles,triples, goes ballistic or goes bust I’m not out of pocket.
A free Silver casino play.
Cheers.
If it goes for a real breakout I will change my philosophy. So far its not quite there yet but we will just watch and see what happens next.
Actually, its highly unlikely silver is going anywhere. After a quick review its not a buy anymore. Not for me anyway. Too many of the stocks are topped out or on last legs.
Just forming a double top is all.
Ha ha ha – Barclays announce a 25% fall in profits and the share price goes up on London open.
Crazy huh?
Now here is something that is REALLY interesting this morning. The Ozzie just took a 165 point face-plant off the high board (right out of the damned blue) and is now trading below .76 to the US Dollar.
So what?!! Who cares about that Birdman?
Well I will tell you cares. You do,and here’s why…
The Australian dollar lifted off at exactly the same time the Canadian dollar took flight in mid January and had flown so high it was just looking for any good reason to fall back to earth.
With news today of softer than expected inflation numbers Down Under and a growing realization that the new Chinese interest in commodities on the China exchange was just a bubble waiting to burst, traders took a deep breathe and dumped the AUD.
And THAT folks is perhaps as good a signal as you are going to get the the CAD is about to hit its own top and by inference Crude Oil will soon be tumbling back to reality and lining up with the fundamentals.
Recall that there is a VERY tight correlation between Canadian Dollars and WTI.
And reflect that CAD and AUD have traded upwards in near unison for the past three months. So keep a close eye on this today and watch for signs the Loonie is also about to top.
At this time Crude Oil is suffering from its highest level of long speculative positions ever(?) which as I noted the other day is a 180 degree turn from a few months back when it was at maximum spec shorts.
So don’t get caught on the wrong side of this thing this week. The way I see it we just got an early signal and the time has probably come to take profits on oil positions or get short Crude again because a reversal in the Loonie could come at any time.
This is only my opinion of course. The Loonie is not falling yet. I could also be totally nuts so don’t take my advice without checking the facts for yourselves because as I often repeat here…sometimes I get these trades wrong.
Here is the 5 minute chart of AUD (good for today only since its a live chart)
Australian Dollar Face-Plant – 5 Minutes Futures Chart– Finviz.com
http://www.finviz.com/futures_charts.ashx?t=6A&p=m5
Ozzie is now down a whopping 2%.
Thanks for that Birdman – (I don’t want you thinking that you are talking to yourself.).
I saw the Zerohedge article but they seemed unable to say, in layman’s terms, why the AUD plunging was important or why it happened. You just covered all of that.
Much appreciated.
Anytime Bob. I will go check with ZH. Have not been there yet today.
OK, so lets dig down a little deeper. The Ozzie has broken down on a Daily Level chart and I think that’s a pretty big deal on an FOMC day. As all of you know the AUD is a commodity currency and as such it often has a great correlation to a variety of resources.
It is especially tied to China though due to the strong trade relationships in the resource sphere so it can function as an early warning indicator of trouble brewing in Asia.
So now you bugs are going to really hate me tell you this but I think its lights out for gold and silver (and oil) as of this mornings action. Its only just begun though but if this had not happened on a day of the Federal Open Market minutes release I might not have even mentioned it.
Commodity currencies tend to fall when commodities fall and rise again as commodities rise (no big surprise there). In the case of CAD it began its long drop just as gold hit its peak in 2011. AUD was in a delayed reaction and did not roll over until almost two years later but it subsequently fell for 3 straight years.
I think the fall in AUD is telling us indirectly about a lack of confidence in the strength of the Asian economies and China in particular as resource demand weakens even though the media release is attributing the drop to domestic Australian inflation numbers that are slumping.
Don’t be fooled though. This is a bigger story than meets the eye.
That Ozzie face-plant, should the fall continue, is going to be the drop heard around the resource world though. Price has now cracked through 6 prior peaks on the daily chart and she is on her way back down to Planet Earth.
Viewed from a weekly chart the action today is going to establish a clear falling trend channel on the AUD as it traces out its next lower low and that likely means the double bottom established in January this year will be invalidated as price falls below that level.
This is a very gloomy scenario for all resources.
So, we should be ready to pull the trigger on DUST ad JDST at 2PM?
I am going to add a 🙂 to that.
I can’t give trading advice Bob but I can tell you what I am doing.
I am long a number of short trades on metals and miners including positions in DUST and JDST. Those should be rewarding if it turns out I was smart enough to buy the right trades.
As always though there is conflicting technicals which you will know by listening to the expert panel here or browsing the gold forums on other sites. So risk still exists even for trades that look to have very positive set ups.
Anyway, I am going with my instincts here so I will just cross my fingers now and hope I don’t get kicked in teeth by the market.
Now its my turn to add a 🙂 Bob because those all-time record long speculative positions in both Crude Oil (WTI) and Silver might just be like rocket fuel if precious metals start to take a dive. And twenty bucks decline on gold will probably set those specs on fire but we shall see what happens. After looking at dozens of Silver charts this morning there are so many showing exhaustion or topping patterns.
The month of May should be terrific for the bears.
Birdman…I am with you on this one. Was hoping gold would drop before Yellen’s speech to give me some cushion should I have to bail from DUST.
Silver is the big mover today having risen almost 30 cents since yesterdays close and then losing all of it plus a few pennies just this morning. In the process it created quite a nice reversal candle and is still dropping.
Makes me happy. Maybe if it falls far enough today it will shut up all the bulls who keep shouting “To da Moon Baby”. Those guys make me crazy.
German nuclear facility computers infiltrated with viruses.
This is more worrying than it first appears, because the facility was NOT directly connected to the Internet.
Sure is quiet around here this morning. Where are the metal heads?
Good morning did you see Larry Edelson latest post. hope this links works http://www.moneyandmarkets.com/whats-gold-mining-shares-77676
Thanks Doug.
What puzzles me about that letter from Larry is that he says his model does not make mistakes. He wrote “…my models on gold have never, and I mean never, missed one single major turning point since 1978. Not one.”
But then he also said ” Although I did not issue a buy signal, I nailed the bottom in gold again, at the $1,044 level in late November/early December last year”.
And that makes no damned sense. If his model picks up every turn then why didn’t he alert his subscribers to what he should have known would be a massive rally in precious metals?
Worse still, Larry mentions two gold stocks he did advise clients to buy but the returns were quite modest in relative terms. Keep in mind that JNUG went up more than 600% in just 90 days.
Larry wrote: “Now, let me discuss with you for a moment the mining sector. Here too, I caught the bottom, although I was not aggressive in issuing buy signals. With the exception of two senior miners I recommended for my Real Wealth Report members — who just yesterday grabbed gains of 46.4 and 61.3%”
So I guess I have doubts about his crystal ball. Guys on this site obviously did MUCH better. Matthew who is often happy to report on such things claims to have tripled his gold portfolio. And that would not surprise me in the least given how well the ETF’s that I favour performed.
Needless to say I don’t entirely agree with Larry today. I still think gold and miners have the potential to drop all the way back to their lows. I could be wrong of course since I also have no crystal ball.
But the charts thus far don’t indicate a monster move on top of this completed monster move. We will just have to see how it plays out.
This is his real wealth report for real conservative investors . He has one that users leverage that cost much more. I just watch his trends and guess what he is doing.
Those conservative guys must be fuming. Especially after reading in the news that every gold and silver miner of note rose at least a 100%. Even an old standard like Teck went up 400%. You know….a real conservative old company.
I’m now up about 3.4 times and only 3%+ off my recent high. That’s measured from my portfolio low in January, not YTD. Reinvesting profits played a part in that performance.
Did more selling and buying all week and remain all-in.
COMEX open interest on silver just reached an all time high of 206 thousand contracts….about 150% of world ex-China production.
I was wrong when I stated LBMA OPTIONS expire tomorrow; it is Friday morning.
(Which explains why the takedown appears to be ordinating out of London today)
IPad again….originating not ordinating!
The central banks cant raise rates, it would bankrupt their countries.
In order to raise rates they would have to QE on a larger scale, to prevent bankruptcy.