"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Wednesday, April 9, 2014

Dovish Fed sinks US Dollar

With no disrespect towards those who actually suffer from bi-polar disorder, if such a thing were not in the world, I would believe that the US Federal Reserve invented it.

Watching them swing from hawkish to dovish in such a short interval makes me understand why our markets are so screwed up. The Fed is consistently changing their assessment of things. That would be just fine and dandy were not the US financial markets addicted to easy money and so utterly dependent on these jokers for their latest fix.

I maintain that our entire financial market system is no longer functional in the sense of reflecting anything resembling reality. As a trader I have to play with the cards dealt me but as someone who cares deeply about the future of this nation, the more I see examples of the kind of crap that we got from these soothsayers at the FOMC, the more despairing I become. Is this what was once the finest example of free market capitalism has become in our degenerate age? The entire marketplace sits around with bated breath waiting, as if some sort of buzzards circling a dying animal, for the pontifications of a group of men and women whom put their underwear on just like the rest of us. Depending on their mood of the month, the markets respond dutifully.

Equities effectively doubled once the news hit the wire and the Dollar proceeded to fall off a cliff, even against the Euro which's zone is struggling with the same "lack of inflation" concerns from their various central bank heads.

The big thing today from the FOMC, in my opinion, was this lack of inflation concern and the fact that the Fed, no matter how much they would love to see it, cannot generate anything anywhere near their target of 2%.

Gold seemed caught in a tug of war between those who believe the near zero interest rate environment, that now certainly seems to be prolonged longer than many expected last month, and those who are keying on this lack of inflation.  The Dollar weakness generated a move into the plus column for the metal but gains were relatively muted as without any sort of serious inflation concerns, the metal run out of guys willing to chase it too much higher, especially with the mining shares relatively comatose compared to the rest of the torrid gains across the equity sector.

Also, brought up was the slowing growth in China and the consequent negative impact on commodity prices, although that was no where to be seen today with the macro funds generally buying through the sector as the US Dollar moved lower.

The Yen actually moved lower against the Dollar as no one seemed to need any safe haven with the spiked punch bowl hanging around longer than guesstimated.

Welcome to the world of our modern markets where a long term trade was cut from 60 minutes to 15....

More later....