DX crossed 93.66 yesterday

This morning it is over 94 – the next stop is the 96s.

Bonds are in a bad spot across the curve… it is not to be discussed in the MSM.

Too much noise creating a fog.

The 6e (Euro) looks as though the 108 level will be targeted.

The ES LIS is 2540, The YM 24622 – Bullish above, bearish below.

 

Historical Context – Overvalued USD.

The historical context of how much $1,250/oz. Au overvalues the DX can be seen in the two charts below.

Observe $1,245/oz. effectively backs Foreign-held UST’s at ~5%, or the lowest level in the 100+ years.

Au:Foreign-held UST’s at ~5%
Au:Foreign-held UST’s at ~5%

 

And that assumes that none of the $100T+ in US Entitlement obligations are counted.

US Entitlement Included
US Entitlement Included

Dec 17 & Mar 18 – YM contracts trading @ Par

22361 is overhead profit target for the December contract – with an extension overhead to 24420…

24-420 is convenient, perhaps that is the time to blaze up short.

Cosmic jokes abound – as the ES is trading on such low volume anything can and will happen.

A solid 5 to 8% correction is long overdue, just a question on when.

XLF puts looking tempting.

Euro trading a high for the session.

Flawed Doctrine – A Hole Too Big To Fill

A worsening crisis – Chairwoman Janet Yellen failed to mention the World’s Central Banks continue pushing on a string as worsening financial conditions consume the Global Financial System…

…With rates @ 1.25% and a $4.5 Trillion balance sheet, count me a non-believer, but then I’ve never believed the Federal Reserve to be anything but a creature on a string.

Chairwoman Janet Yellen: “Our more resilient financial system is better prepared to absorb, rather than amplify, adverse shocks, as has been illustrated during periods of market turbulence in recent years. Enhanced resilience supports the ability of banks and other financial institutions to lend, thereby supporting economic growth through good times and bad.”

A farcical thesis… would be gracious.

Disingenuous in the extreme for what was left unspoken – ZIRP, QE∞, $10.4Trillion of global debt securities trading with negative yields, all shined on.

Managed Money has been squatting within the ETF and passive strategies Complex for years – very little cash remains sidelined. A sharp downturn would require outright selling, as protection would not provide adequate capital for investment were it to be “In the money” at the proper time.

It rarely is, therefore unwinding much of anything appears to require an enormous lifting of all boats… something we should consider probable after the next correction.

ETF’s have herded capital into unprecedented positions. Years of declining volatility has become a one way trade placing greater risk of an abrupt and very sharp reversal.

I believe this dead ahead… a rapid and precipitous adjustment to the downside.

Liquidity and its attendant mis-pricing of Risk has never been so grossly distorted in my lifetime.

Passing the blame – “Increased resilience of the financial system” is now wholly dependent on the present Administration – their course of action(s) – regulatory reform long promoted is again the dire enemy of Wall Street and the Federal Reserve.

Janet Yellen has politicized the issues of regulatory reform – it is safe to assume President Trump will be walled in once again. The FED Chair may have made her last speech, but payback… she’s a cruel mistress.