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There is so much data flying around out there. From the Credit data we reviewed yesterday
to weakening manufacturing and exports to employment up
nicely one month and down big the next, to frisky consumers (the economy's
'back end', putting it nicely) out there confidently living it up.
Big pictures help us let it all simmer and take out the
noise. Here is a big picture for you. and it is an unchanged story; America
has eaten its financial seed corn (replacing it with the soft meal known has
credit) and financial market analysis is now in the hands of data freaks
parsing and quantifying every little twitch on short time frames to draw
conclusions and extrapolations based on little more than a black hole (that
would be debt).
Here is the 10 year yield (blue shaded area) pinned down
for decades by our 'Continuum' indicator, the monthly EMA 100 along with the
2 year yield (orange).
10yr & 2yr yields from WSJ
Don't get me wrong, playing to the
short-term data and not fighting what is vs. what we think
we know has worked well in the current phase. But that is interim stuff. The
chart above says so. 2 year yields have been rising! Oh my, they must be
serious about normalizing monetary policy!!
Ha ha ha. we have been eating the national seed corn over
the decades, all the way down to 0% today; and now they are normalizing
policy?
"Why, sometimes I've believed as many as six
impossible things before breakfast." -Alice in Wonderland
I live in America, so naturally I am more America-centric
in my criticism. But our friends in Europe, Japan, China, Canada, Australia.
they have all hopped aboard to one degree or another and by one method or
another.
Constant doom-saying by the doom sayers does no good,
because we are talking big pictures here. These things creep along literally
for decades. Indeed, doom-saying to stimulate peoples' fear instincts has
caused a lot of pain over the last few years for the people who acted on the
advice of the Sons of Martin Weiss.
But it does not change the fact that the US is near zero
yields and relies on the engineering of debt to manufacture its boom cycles.
Here at Boom ZERO (T, ©) one might wonder where the
future path leads. Secular Stagnation, as seems to be the new faddish reason
to be bullish? I could see that as long as people continue to suspend
disbelief (which again, can take decades). Hyperinflation? I don't think so.
At least not in any form that commodity bulls will be able to pitch.
Deflationary resolution? Well, deflation is and has been trying to address
systemic excesses for decades.
I'll take C, Alex. deflation. This is fought every step
of the way by (inflationary) policy makers now stuck at ZERO and trying
desperately to put some ammo back in the Inflation Gun. It is too late.
Taking out all the brainy egg heads (Keynesian and
Austrian alike), short-term data crunchers and trading captains who think
they can predict what is upcoming for other people to follow, what if just
maybe, there is no predictable answer because we are pinned to the mat (ZERO
rates) in a system that has never been at this juncture with this particular
combination of inputs?
Tell me again why it's called Notes From the Rabbit Hole? Why is the
other site called 'but it is what it is' (biiwii
)? Another good one from Alice in
Wonderland:
"How
puzzling all these changes are! I'm never sure what I'm going to be, from one
minute to another."
What is so
wrong with that concept? In this kind of a system, you stand too strong for
any one thing (i.e. putting your capital where your idealistic self is) you
can get blown up in a heartbeat. Changes always come, but you have to be
patient (measured in years), play the game and yet realize at all times what
the big picture says.
NFTRH.com and Biiwii.com
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