In September I wrote a post where gold made the same wise guy statement, because there is a valid argument that sees the onset of a ‘tapering’ regime as positive for gold.
Today it is the very asset class in the cross hairs of tapering, long term Treasury bonds that is saying ‘Taper this you mofos!’ Amidst all the hysteria about reduced bond purchases by the Fed the TLT fund is holding an important moving average and threatening to turn up.
Click HERE or on Chart for larger view
It is so cool to think about how utterly enthralled the herd is with policy makers these days (doing a 180° to 2011 or 2009). As if policy makers were not compelled to start babbling about tapering because long term yields had already bottomed and turned up. They then rose persistently right to the targets that NFTRH had all along. Voila, tapering initiated at the last FOMC.
Yields rise = taper jawbones in the media; not taper jawbones in the media = yields rising.
Today if yields do the contrary thing and decline (into an eventual counter cycle) maybe Huey, Dooey and Louie will start jawboning a tapering of the ‘taper’ talk. Only this time, I would not necessarily expect a resumption of full QE to hurt gold; not if it comes in response to a decelerating economy. That’s a big detail sitting right in the middle of the analytical equation.
Okay, so the post riffed a little and got off its original message, which would be that T bonds are threatening to put a majority off sides due to their own herd following behavior patterns. There, now I’m done.
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About & ToS
About Biiwii.com
Gary Tanashian of biiwii.com successfully owned and operated a progressive medical component manufacturing company for 21 years, keeping the company’s fundamentals in alignment with global economic realities through various economic cycles. The natural progression from this experience is an understanding of and appreciation for global macro-economics as it relates to individual markets and sectors.
Along the way, a geek-like interest in technical analysis, a long-time interest in human psychology and various unique macro market ratio indicators were added to the mix, with the result being a financial market newsletter (and dynamic interim updates), Notes From the Rabbit Hole (NFTRH) that combines these attributes to provide a service that is engaged and successful in all market environments by employing risk management first, and opportunity for speculation second.
Primary Influences:
- Former US GAO chief Robert Walker
- Robert Prechter’s Conquer the Crash
- Doug Noland’s Credit Bubble Bulletin
- Reminiscences of a Stock Operator
