NOB up 23 ticks on NFP. Figure that one out.
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The ACD Method
- Thread starter sbrowne126
- Start date
Could you elaborate? I have some other anomalies. Copper down. Gold down. Usd up across the board. No aud, no Nzd. No money going to the periphery. It's a little suspicious. If the dollar keeps rallying, it should be deflationary. So there's no need to raise rates. It should be inflationary for everyone else not tied to the dollar, but it hasn't appeared yet, except in the property market. Am I missing something?
Could you elaborate? I have some other anomalies. Copper down. Gold down. Usd up across the board. No aud, no Nzd. No money going to the periphery. It's a little suspicious. If the dollar keeps rallying, it should be deflationary. So there's no need to raise rates. It should be inflationary for everyone else not tied to the dollar, but it hasn't appeared yet, except in the property market. Am I missing something?
Well the yield curve is doing exactly what it should be doing. It's forecasting no growth going forward, or more precisely about 1% growth. Yes a strong dollar is deflationary although i'm not sure it's going to rocket to the moon anytime soon but if it stays bid, rates really can't go higher. If the Fed does start to raise, the curve will flatten even more because there is no way the long end is going to go up. I think Gold is pretty expensive here based on 1% inflation. Equities on a valuation basis are actually probably cheap compared to bonds, gold and real estate. That is what is keeping this relentless bid in stocks. It's not about value but relative value. Most people seem to miss that.
And copper? The problem I see is that yes , equities on valuation would be cheaper, but our manufacturing might continue to weaken. Cat, oil etc. So it might be good for financials not dependent upon yield, some services. Basically it looks like the rich get richer and so on. But it wouldn't surprise me to see poor old economy numbers in the face of a rally.
Copper is overbought by China. This is the problem when one country becomes such a large buyer of a commodity. Copper is no longer tied to US growth but emerging market growth and if emerging markets are slowing, and they are, copper will not a hold a bid. As soon as you get bullish in China again, then you can buy copper.
So if it confuses everyone that's good, in contraction land.
What concerns me is that the world economy is 100% correlated. One of the things that saved us in 2008 was the growth in China, India and Brazil. One of the things that saved us domestically was the strength in the oil patch. It's actually good to have some economies prosper when others are not. But when we are all in the same boat, there is no balance. On the plus side, the pain is less since on a relative basis, you don't feel the boat sinking. We're like a boiling frog where the heat is going up in such small increments that we don't even know we're being boiled.