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Glad you are keeping a tab on inflation duc. It usually creeps up on you while not being aware of it...
Glad you are keeping a tab on inflation duc. It usually creeps up on you while not being aware of it...So yesterday I posted this in the Gold forum:
View attachment 103559
Is inflation, moving forward, going to be an issue for common stocks?
If rising inflation creates a response from the Fed. with regard to rising yields, probably.
When rates last started to rise in 2018: in January 2018 the 3mth sat at a yield of 1.5%+/-. By July 2018 it sat at 2%. By October (when the stock market started to sell off) it sat at 2.4% +/-. The 30yr Bond went to just under 3.5%.
Historically that is a very low yield. The market has little to no tolerance for rising yields, which, could very well happen if inflation is once again adjudged to be a risk. The Fed. reversed its tightening posture with regard to yields and the market recovered in early 2019.
So the end of last week saw moves in Gold, Silver, Oil and the 30yr Bond. Now these are single day moves. At the moment, it is simply a fluctuation and nothing to rebalance your portfolio on. However it is something worth watching simply because there has been an increase in the financial 'media' about inflation.
It is not however being overly discussed by non-finance persons.
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Inflation is one of those phenomena that can be created out of 'belief'. If enough people believe; and start acting on that belief, there is the potential (if the underlying circumstances, viz. credit expansion are present) to drive almost a self-fulfilling prophecy.
Unfortunately the above chart is of too short a time frame to really give much information as a comparison.
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So we have (above) Silver, Industrial metals (Copper, etc) 20yr Bond, US Dollar and Energy. I probably should have added Agriculture to that also. I used XLE as USO is somewhat broken atm.
This is what I will be keeping a close eye on moving forward. Plotting the relationships as ratios also tends to clarify the picture (information) with regard to these relationships.
On the above, there would not seem to be an excessive threat of inflation currently. Yields are still low. Energy, historically cheap with current high inventory. This will change moving forward as the world has lost production. It remains to be seen just how much. The dollar is also stable atm.
Silver, although it has jumped...is still below its early 2020 high. Until it trades through that point, Silver is not signalling anything as far as inflation. If it trades through that high I would be paying much closer attention.
If inflation does move higher, it will (in my opinion) be because of oil and the damage to production inflicted by the Saudi price war. That would mean oil moving north of $70. To that point, I think the market would live with it. After that, I'm not so sure. Early moves signalling inflation will likely first show up in the Dollar/Bonds.
As to the virus...only a crushing, worldwide re-infection driving a second global shutdown (if that even happened) will see the 'bounce' fail and move below the lows already seen.
jog on
duc
Woke up to stellar figures in New york sp500+3.5%, 4% for dow30
Putting this in perspective buy friday sell now and you have beaten bonds and term deposit for the next 2 years.....unreal isn't it
Mr duc leverage entries should have done well!
The other way to see that is borrow money at 2pc friday,and invest it in a dow30 index,,sell1/2 gain today and you have repaid your interest for next 2 years
what I mean with that post is that the price of money is completely out of wack;Could have worked, yes. Beautiful in hindsight isn't it ?
Could've also been killed if the market fell as it did in any one of the days during the crash. In that case would be paying back the interest and lost principal over the next 5 years !
True, hence likes given. I wouldn't do it with money I can't afford to lose thoughwhat I mean with that post is that the price of money is completely out of wack;
as for betting, millions of people are doing this every day in casinos with worse odds.
Realistically , there are less chances to loose money now or in the last month than there was in january, august or December last year yet people were piling into margin loans like mad at the end of last year...
Outch :-View attachment 103607
So far this looks at least plausible, reached 2979 then turned down.
Hum would you offload urgently your gov bonds (Australian) or do you expect them to still be seen as protection by many burnt this year ?SPY approaching 200SMA
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Forming an ascending triangle with the 20SMA and 200SMA. Whether it resolves this week or next is the question. So to help in that decision:
View attachment 103648
Junk Bonds. Risk on. Not back to a Bull market (still a long way below the 200) but if you can buy this, you can buy stocks.
View attachment 103649
Again, bullish.
Why? The search for yield from Pension Funds, Insurance Companies, etc, will drive these markets and stocks, particularly those that pay dividends that are considered (a) safe and (b) growing.
Treasuries, while a safe haven, are starting to see a rotation back into the (above) risk assets.
View attachment 103650
View attachment 103651
So 'Risk On' is back on the table.
jog on
duc
I mean to see gold vs market position in the US.Let's wait for the end of the session...
So far this looks at least plausible, reached 2979 then turned down.
So if we do get the top on 29 May or thereabouts then what happens beyond that?
Decline as in we're talking about a 10% pullback?
Or decline as in it's mainstream headline news and seen as a major crisis sort of decline?
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