http://edegrootinsights.blogspot.ca/
Snippet:
What Does the Invisible Hand Already Know About The Final End Game?
Jim's timeline commentary does a great job explaining why QE has become the global policy tool of choice to kick the can (excessive debt of the Western economies) down the economic road.
In my opinion, his best observation “once on the QE road there is no exit other than business recovery success which will not occur” explains why gold is rallying and capital flows remain defensive despite periodic risk-on reallocations.
For instance, a great indication that infinite QE cannot remove the can from the road is revealed by the actions of the invisible hand in the US Treasury market. US Treasury bonds sold off sharply once the Fed announced QE(n) disguised as QE3. Experts were quick to proclaimed QE3 as highly inflationary and pronounce US Treasuries as dead money. An untold number of bodybags have been filled by investors eager to proclaim long bonds as dead money.
My September 14th commentary (US Budget Deficit Hits $1.16 Trillion Through Aug ), I wrote
Chart: US Treasury Bond 20YR+ (TLT) And US Treasury Bond Diffusion Index (DI)
http://4.bp.blogspot.com/-5UpLW8yOnV...BUSTB%2BDI.PNG
Observations:
Snippet:
What Does the Invisible Hand Already Know About The Final End Game?
Jim's timeline commentary does a great job explaining why QE has become the global policy tool of choice to kick the can (excessive debt of the Western economies) down the economic road.
In my opinion, his best observation “once on the QE road there is no exit other than business recovery success which will not occur” explains why gold is rallying and capital flows remain defensive despite periodic risk-on reallocations.
For instance, a great indication that infinite QE cannot remove the can from the road is revealed by the actions of the invisible hand in the US Treasury market. US Treasury bonds sold off sharply once the Fed announced QE(n) disguised as QE3. Experts were quick to proclaimed QE3 as highly inflationary and pronounce US Treasuries as dead money. An untold number of bodybags have been filled by investors eager to proclaim long bonds as dead money.
My September 14th commentary (US Budget Deficit Hits $1.16 Trillion Through Aug ), I wrote
Accumulation of US Treasury bonds by the invisible hand during the sharp selloff as part of a weak to strong hand transfer would suggest trouble in 2013. This has been illustrated by a rising DI reading as price declines. Last week's sharp selloff has yet to be included in the computer analysis illustrated below (chart 2).
What did the invisible hand do? A sharp increase in Treasury Bond's diffusion index (DI) from -5% to 43% screams ACCUMULATION during the selloff (chart). Anyone screaming 'sell bonds' once DI exceeds 60% will be standing on thin ice.Chart: US Treasury Bond 20YR+ (TLT) And US Treasury Bond Diffusion Index (DI)
http://4.bp.blogspot.com/-5UpLW8yOnV...BUSTB%2BDI.PNG
Observations:
- The invisible hand is accumulated the US Treasuries into weakness warns of trouble ahead.
- Positive and negative divergences displayed by drug and transportation stocks, respectively, warn of trouble ahead.
- Jim suggests that the end game problem is an extended recessionary business conditions going into 2015 to 2017 wherein the supply of dollars continually expands, the US Federal Deficit. As usual, he's correct. Smart money, generally too big for quick and discrete decision-making, often positions well in advance of cycle highs and lows. Cycle highs and lows generally coincide with headline events. Numerous negative and positive divergences between sectors and markets suggest that smart money already knows the importance of 2015.