Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Yellen: Deeper Down the Rabbit Hole We Go

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featured.yellenWhere once Alan Greenspan was vilified for dropping interest twisty.smallrates too low for too long and thereby inflating a credit bubble (before his bouncing baby bubble forced him to try to head things off at the pass, eventually jacking the Funds Rate back up to 6%), today these very scary clowns talk boldly about buying stocks and other risk assets in order to keep the pretense of a normal economy and stock market intact.  I mean guys, this stuff is supposed to be the product of tin foil and gamma rays, not reality!

Meanwhile, every month or so we are treated to a massively stupid ritual of ‘will they or won’t they?’ as the committee chaired by this woman talking crazy talk is taken seriously by many as it makes its profound decisions (like doing nothing, for instance).

What the hell is monetary policy tightening anyway when you’ve got a backup plan to buy the whole damned stock market and some corporate bonds to boot?  It’s a joke. I can understand why perma bears are perma bears.  This thing is so fake it’s… not laughable… it’s surreal.  It’s Wonderland.  And the whole financial services industry laps it up and plays it straight, as if it is providing a very sensible and buttoned down service to its clients.

Newsflash:  If you’re depending on one of the 95% of advisers out there operating on conventional metrics you are playing little more than a game of ‘gee, I hope the Fed’s latest plans to rig the stock market will work’ because that is the game that the financial services industry is playing.  That is not my bias speaking; it is Janet Yellen speaking.

Yellen says Fed purchases of stocks, corporate bonds could help in a downturn

The Federal Reserve could get benefits from buying assets other than long-term U.S. debt if in a future downturn it could not buy any more government bonds, Fed Chair Janet Yellen said on Thursday.

Referring to asset purchase stimulus programs in a video conference with a minority bankers meeting in Kansas City, Yellen said: “If we found, I think as other countries did, that they could reach the limits in terms of purchasing safe assets like longer-term government bonds, it could be useful to be able to intervene directly in assets where the prices have a more direct link to spending decisions.”

She’s literally saying that if we run out of safe assets we can purchase unsafe assets (i.e. risk assets) when things go off the rails.  She is also saying that she would hope to leverage that risk into goosing consumer confidence if they show any signs of backing off.  Ladies and Gentlemen, these are the “tools” of the next phase of Federal Reserve experimentation.  I thought that Operation Twist, with its stated goal of “sanitizing” inflation signals by manipulating the Treasury bond market was ballsy; Bernanke after all, made Greenspan look like child’s play.  Yellen?  She’s simply guiding us deeper down the Rabbit Hole.

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Currency Messages From Several Views

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Each week in NFTRH we review the multi-currency (weekly) chart and occasionally take a look at various pairs and ratios as well.  With the look of things this year (so many items are going sideways) it is hard to fathom how anyone would want to be a FOREX jockey right now.

The multi-index chart shows Uncle Buck, Euro, Canada Dollar and Aussie Dollar going sideways with only the bias varying (e.g. CDW looks bearish and XAD tinged bullish).  What a boringly sad crew with the exception of the Yen, which is still in rebellion (breakout) mode and the terribly bearish GPB, which could be making a bounce pattern.

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USD-EUR is in an ugly pattern above support. (more…)

BoJ, FOMC and Where to Now?

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Below is the opening segment of the September 25 edition of Notes From the Rabbit Hole, NFTRH 414…

The Bank of Japan gave us a glimpse as to just how far down the rabbit hole we may have to follow global policy makers as we try to make sense of ever more complex and shall we say, innovative ‘tools’ being used in the effort to engineer individual economies and asset markets within the global financial system. BoJ announced it would conduct “JGB purchase operations” in order to “prevent the yield curve from deviating substantially from the current levels”.

The market initially interpreted this to mean BoJ stood in support of a rising yield curve, which would for example, help the banks (ref. MTU and SMFG, which exploded higher off of the support levels we had projected), but by the end of the week the Japanese Yield Curve had eased substantially and there seemed to be confusion about what the policy’s intent, or would-be effects, actually were. I wonder if the BoJ even fully knows what it is doing now. Lots of moving parts in a complex system.

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‘Gold vs.’, Pre-FOMC

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We are well along in the precious metals correction and have downside targets for gold, silver and the miners.  In order for that to be a ‘buy’, the sector and macro fundamentals will need to be in order.  Some of those are represented by the gold ratio charts vs. various assets and markets.  Below are two important ones.

Gold vs. Stock Markets has been correcting the big macro change to the upside since leading the entire global market relief phase (potentially out of the grips of global deflation) earlier in the year.  A hold of these moving averages, generally speaking, keeps a key gold sector fundamental in play as the implication is that conventional casino patrons are choosing gold over their traditional go-to assets, stocks.  A breakdown from the moving averages and it’s back to Pallookaville for the gold “community”.

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Perspective and Market Notes

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The opening segment of this week’s Notes From the Rabbit Hole (NFTRH 412) was intended to be a quick blurb but went on to become a five page exercise. It is shared publicly not so much because it is hard core analysis (which the rest of the report took care of), but because after a week like last week I think being a little wordy can be for the better.

I had a difficult week last week; a couple things had gone wrong and my schedule was just ridiculous. On Wednesday I was feeling pretty stressed out and wondering why I just can’t seem to catch a break. Then I looked up and saw a man with two hooks for hands walk by. It was almost as if he were sent into my view to straighten me out. screen-shot-2016-09-10-at-6-32-49-pm

Another source of perspective is a more obvious one. Today being September 11, I would venture that we all remember where we were and what we were doing on that day in 2001. I was working at my company. It was a normal morning and then it seemed like the world just stopped, except for the jet fighters that were putting a lock down to the sky above us. It seemed like the world then magically came together for a few days… fast forward to today’s divisive, sad and hateful political theater.

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