The Mess That Greenspan Made - Part 2

Misunderstanding the Fed

Here’s an entertaining clip of Bill Fleckenstein on CNBC in which Futures Now host Jackie DeAngelis begins by pointing out that the continuing market rise is evidence bearish investors simply don’t understand Federal Reserve policy.

Fleckenstein notes, “If you want to pursue idiots like the Fed doing crazy policies, and if you think you can get out in time, go for it. I don’t want to try to do that … When markets decline, how fast will it be taken away from you?” after which there is an awkward silence.

Friday Morning Links

MUST READS
Relief for Europe as Scotland stays put – Reuters
Scotland votes “no” on independence, spurring relief rally – USA Today
Rush to Invest in Alibaba, but Concerns Linger – Dealbook
In Alibaba’s IPO, where did the skepticism go? – MarketWatch
Market Frets Over Hawkish Dots Despite Dismissive Yellen – WSJ
Fed Signals No Hurry to Raise Interest Rates – NY Times
Yellen says poor Americans live in ‘sobering’ conditions – MarketWatch
Do you have $2,385,036? No? Then you’re not in the wealthiest 1% – Vox
Food-stamp enrollment in Illinois outpaces job creation by nearly 2-to-1 – Illinois Policy
Fed’s Q2 Flow of Funds: Household Net Worth at Record High – Calculated Risk
Shale Fracking Is “This Decade’s Version of The Dotcom Bubble” – Washington’s Blog
Eric Holder’s Shameful Legacy on Wall Street Fraud – Fiscal Times
Retirement savings gap widens between rich and poor – CNN/Money

MARKETS/INVESTING
World stocks rise as Scotland votes to stay in UK – AP
Oil Clogging U.S. Railways Seen Limiting Exports of Grain – Bloomberg
Seth Klarman: “We Are Recreating The Markets Of 2007″ – Zero Hedge
Be like Calpers: Dump your hedge funds – MarketWatch
Treasuries Little Changed Before U.S. Data – Bloomberg
Gold poised for third weekly drop on strong dollar, equities – Reuters
Super-rich rush to buy ‘Italian Job’ style gold bars – Telegraph
China Opens Gold Market to Foreigners Amid Price Ambition – Bloomberg
Asian gold demand to kick in here – Suchecki – Mineweb
Why is the Price of Gold Falling? – PragCap
China’s long term gold plans – Mineweb

ECONOMY/WORLD/HOUSING/BANKING
America’s Self-Inflicted Economic Wounds – Reason
No inflation, no problem. US not turning into Japan – CNBC
U.S. Economic Confidence Index Remains on Plateau – Gallup
It’s not too soon to worry about the US economy – Fabius Maximus
Who Wins the Battle Between Indian and Chinese Billionaires? – WSJ
Venezuela Default Naysayers Undermined by S&P Downgrade – Bloomberg
Time to give the housing market a shot of adrenaline – Fortune
Mom-and-Dad Banks Step Up Aid to First-Time Home Buyers – Bloomberg
If Builder Sentiment Is So Bullish, Why Are Housing Starts So Low ? – WSJ
Lacker Would Prefer Fed Sell Mortgage-Backed Securities During Policy Exit – WSJ
Fed: Forget “Escape Velocity,” Not Gonna Happen, Ever – Wolf Street
Yellen: Fed balance sheet to take years to shrink – AP
The Fed and Inequality – CEPR

 

The U.S. dollar has become about the only thing that matters for precious metals these days as, along with the rest of the natural resource sector, gold and silver are being pummeled by investors and traders with each move higher for the dollar. This is consistent with the well established inverse correlation between these asset classes and, absent a substantive change in course for the dollar, it’s hard to see how precious metals can rebound.

Gold and SilverThe Federal Reserve policy committee gathers this week and it is possible that the central bank could present a more dovish stance than expected.

This could bolster the metals market and commodity prices in general, as could renewed safe haven demand arising from U.S. military action in the Middle East or a buying surge in Asia at the beginning of a seasonally strong time of the year. But, for the time being at least, the dollar is in charge.

The gold price saw its biggest weekly decline since a drop of 3.6 percent in late-May and it now sits at its lowest level since early-January. This comes after the trade-weighted dollar strengthened for the ninth consecutive week, rising to a six-year high against the Japanese yen in the process. Given the surge in the dollar and gold’s response as shown below, it seems it could have been much worse for the yellow metal in recent weeks.

[To continue reading this article, please visit Seeking Alpha and to access precious
metals commentary that Tim only shares with subscribers, join Iacono Research.]

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Monday Morning Links

MUST READS
China anxiety knocks shares, oil – Reuters
Why we are forever blowing bubbles – China Daily
China August industrial growth hits 6-year low – MarketWatch
Why the Scottish Vote Is Shaking Up Europe – Politico
Why ‘Bravehearted’ Scots Will Vote for Independence – Fiscal Times
Scottish independence: Campaign leaders stress vote will stand – BBC
Diminishing Deficit Delusion: National Debt Soared By $1T In Last Year – Contra Corner
Will the FOMC remove “considerable time” language from its statement? – Sober Look
Investors tell Fed: don’t fumble interest rates – CNN/Money
Will the Fed Avoid a “Language Tantrum?” – Bloomberg
1937 parallels for today’s global economy – Guardian
King Dollar and the Peripheries – Noland, Prudent Bear
A Warning from Graham and Dodd – Hussman Funds

MARKETS/INVESTING
Global stocks down after weak China data – AP
Rising rates pose headwind for stocks – USA Today
A Closer Look: Market Cap – Alhambra Partners
Stock bull-bear line blurred by pending Fed action – MarketWatch
Record S&P 500 Masks 47% of Nasdaq Mired in Bear Market – Bloomberg
How to Preserve Capital During a Bear Market – Wealth of Common Sense
What You Need to Know about Next Week’s 3 Key Events – Marc to Market
Treasuries Are Little Changed Before Inflation Report, Fed Meet – Bloomberg
Gold rebounds on weak shares, but near 8-month low as Fed in focus – Reuters
Gold Industry Needs ‘Cleansing’ of Weakest, Fidelity Says – Businessweek
Pain for gold, silver price as hedge fund slash bullish bets – Mining.com

ECONOMY/WORLD/HOUSING/BANKING
The roughed-up American – Washington Post
Pessimism about U.S. growth rates – Econbrowser
Not all the oars of the economy are rowing equally hard – MarketWatch
OECD Trims Developed World Growth Forecast as Risks Build – Bloomberg
Almost Half of Wealthy Chinese Want to Leave, Study Shows – WSJ
Bad Loans Could Be Disastrous for China – Bloomberg
House price cuts point to a shift in Southland market – LA Times
The Entire Housing Market Hit A Wall In August – SRSrocco Report
California Home Sales Dive, Prices Hit Wall, Millennials Blamed – Wolf Street
Draghi’s $3.9 Trillion Ambition Seen Stretched in Survey – Bloomberg
How Does Janet Yellen Spend Her Time? – WSJ
The Fed: On course and on the money – CNBC

 
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