The Enablers… The FED And The Central Banks

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This is just going to be a quick technical update. We haven’t truly seen anything game changing take place over the last two weeks.

We continue to hear chatter of a China/US trade resolution, but we doubt this pig will be dealt with any time soon. This chart to the left is certainly cannon fodder for #POTUS to continue to pound the pavement for a much better US trade deal.

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The Commerce Department released their latest numbers last Thursday which showed that Imports exceeded Exports by a new record of $914 billion in 2018. (WSJ)

50p vwap Central Banks

Trade imbalances are very difficult to actually change. When we look at who is supplying vs who is demanding, when we look at who has the capacity to produce, the proper labor costs, the proper input costs, these are just a few of the chaotic variables that go into quantifying trade activity. Now toss in a bit of currency construct and things really take a whole new meaning. We figure this situations isn’t going to be resolved any time soon and considering the record deficit, its pretty safe to say, Mr.Trumps power position is certainly in a bit of jeopardy.

Before we get to the market technical’s and February recap, let’s look at another great topic that we have seen pop up over the last few weeks, income inequality. As many of our readers know we squarely blame the FED and the central banks directly for this, as they are the enablers. They claim dual mandate of steady prices and full employment, yet this next chart makes it quite clear, that by enacting QE and low artificial long term interest rates, the FED and all the central banks target one class and one class only…the owners. Who are the owners? Well all those that are lucky enough to own businesses, to own shares, to have equity, to have bonds, to have trusts. This chart should make this point painfully clear:

50p vwap Central Banks

What’s truly sad is that some of the central banks aren’t even denying such antics, as outright private asset purchases and free loans have become common place. When people clamor like @AOC does constantly that capitalism is to blame for inequality, she obviously doesn’t understand our monetary system…then again, why expect her to, she was hand picked out of 10k applicants by the Justice Democrats, who somehow were fortunate enough to install 6 candidates to Congress…who funded them, is my question!

For all those economic fundamentalists out there, I hate to break it to you, but the next stop for US yields is #ZERO and pegged till the system burns down because as this next chart shows, until the US dollar or the US economy has some real competition from the consumer side and trust side, this is the only chart that matters:

50p vwap Central Banks

How much of a drain on economic efficiency is $600 billion a year in interest? Think of the money that needs to created just to pay for interest? Is it me or is this not the dumbest mechanism in a modern digital age where we can simply price by the true intrinsic worth of supply and demand.

Ok on to the charts and since we are on yields, lets just look at the US 30yr bond which is now back above the 50p Vwap:

50p vwap Central Banks

We can see that the FED’s weak knees has caused the US yield curve to continue to steepen, depicted by the FOB or US 5y30y spread:

50p vwap Central Banks

Gold was the talk of the town just a few weeks ago, but now it seems to have lost its lustre. We tend to look at Gold not by itself but rather vs its other metallic counterparts, like Copper. Copper has outperformed Gold since late January:

50p vwap Central Banks

Quite often we like to look at the European DAX market for any indications of equity direction. It seems as if the 50p Vwap has put in enough support for the market to bounce:

50p vwap Central Banks

Moving on to the SP500 we can see the 2811 has been hit a multitude of times over the last 6 months and this recent bounce has seen a trade right up to it once again:

50p vwap Central Banks

We took a peak at the Google’s chart and we thought it was curious that this last new high is being met with diverging Stochastics, so will see how this signal pans out:

50p vwap Central Banks

Finally we close with the performance sheet of the markets that we follow, Crude continues to be this year’s top performer up over 24% while the VIX is the laggard down over 22%. You can reference the list at the end of this letter for more info.

Also we would like to mention that one of our close allies is moving up the Amazon best seller list with his book Q-Anon An Invitation to The Great Awakening. We turned most of our readers on to “Q” in 2018 but we have followed the movement ever since. The mainstream media likes to use “consipiracy theory” when it comes to this topic, yet we know who are trusted sources are and this movement is very real. So real that you will continue to hear more about it in the coming months, they go by the #WWG1WGA (Where We Go 1 We Go All) Anyhow, as our readers have come to know, we like to keep you up on the latest trends so you can be the highlight of your office or your cocktail parties. Thank you for reading, cheers.

50p vwap Central Banks

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