Starting the Count Down

On March 30th we outlined our views on the long economic cycle and how one can build a case that we are in the closing 2 plus year phase of the current cycle.

How is the remaining time in this Long Cycle going to evolve, no one knows for sure, this is an unprecedented period of artificiality, even the Fed has only theories on how this will go back to Normal.

What we do know is that there will be some big twists and turns.  The Fed is strongly cheer leading opposing issues:

1) Global QE III in Europe, China, Japan, any country that will listen to how to fight the big problem, deflation; and

2) Talking down the dollar as that is the only choice to fight the natural reaction to Global QE.

The markets are reacting by coiling into an intense technical formation that will erupt over the next couple of months, weeks, or days.

At this  moment my sense is that there are three things that the market believes and is acting upon:

1) First that the FED will move slowly with a lot of subtle warning on its coming moves.

2) Secondly, putting money into Global markets, especially Europe will be a smart move.  This includes a belief that Global markets will pull US markets higher to a new Bull phase.

3) Third, Global QE will push the lagging commodity and oil markets higher.

With all this in play the Gold bulls are lunging at the gate of what they perceive will be another move higher as chaos takes over.

And then reality sets in, if all these factors do start to trigger, the FED will be forced to start the end to artificiality, and with that all bets are off. Remember they say they are data dependent.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

9 − 7 =