Finansiella Insikter

Rekommenderar att lyssna till vad James Turk har att säga om den allt svagare dollarn i följande KWN-intervju:

Here we are right at the lows and in fact we are actually now probing the November 2009 lows on the dollar index. The interesting thing is that the low in 2009 on the dollar index that is when the Greek crisis started to unravel and people went into the dollar as a safe haven.

And here we are right at those lows again, the Greek crisis is reemerging because apparently they are going to have to restructure those debts and there are going to be some losses taken, and no one is going to the dollar as a safe haven. To me that suggests that we are very close to this waterfall decline in the dollar that we have been talking about.”

When asked what will precipitate the waterfall decline in the dollar Turk replied, “Ultimately it’s going to be the loss of confidence in paper currency and the promises from Bernanke that he’s going to fight inflation when it occurs, and everybody knows that there’s a lot of inflation that they are not fighting.

The politicians unwillingness to cut spending or have any kind of discipline forced on them, the S&P credit rating, putting the US government’s AAA rating on negative credit watch, cumulatively all of these things like one stone at a time or one straw on the camel’s back, eventually the camel’s back is going to break.

That’s why when I talk about a waterfall decline, I think we are really at that stage where this is going to go all at one time. The Scottish historian Niall Ferguson has a very good description he says, ‘We live on the edge of chaos’, and what he means is that if you keep putting bits of sand on top of a pile, one grain of sand at a time it looks really pretty until you have one grain of sand too much and the pile collapses.

It’s the same thing here with the dollar, the news is just continually bad. There is nothing being done to put the dollar on the right course and we are going to have one little news item whether it’s Greece, Portugal, budget deficits in the US, who knows what? Chinese unwilling to buy US debt securities, can’t really forecast what that one little news item is going to be but that will break the confidence and then you are going to see that waterfall decline.

Dollarn har nu på morgonen fallit igenom det viktiga stödet på dollarindex (DXY) vid 74 som utgjorde botten innan Greklandskrisen 2009. Skulle inte bli förvånad om vi får se någon slags ’tillverkad händelse’ för att skapa ett tillfälligt dollarrally och undvika en kollaps. Om vi inte får se ny negativ information från Europa (t ex i form av ett förnyat rykte om grekisk omstrukturering till helgen) så kan Ben och Tim alltid plocka fram någon korrupt Fed-ledamot som kan spy lite propaganda och snacka upp dollarn genom ‘verbal intervention’.

James om silver:

I don’t see the shorts panicking yet. I think we are getting to the stage though where people are afraid to add new shorts into the markets simply because of what’s been happening with the price. So I’m still looking for my $50 target and when we were speaking on Monday I said it could happen in a couple of weeks but we’ve gone up a couple of bucks in just the last couple of days.

So yeah, you are going to get that short covering and you are going to get the panic and it’s going to take things higher.

Det var ett tag sedan vi så tydligt såg hur vargflocken började samla sig runt sitt byte som de senaste tidens negativa nyheter om Portugal.

I förra veckan kunde vi läsa följande:

Portugal’s debt rating was cut by Moody’s Investors Service, which cited a weaker outlook for economic growth, risks to the government’s deficit- reduction plans and a possible need to recapitalize banks. The rating was downgraded to A3, four steps from so-called junk status, according to an e-mailed statement from Moody’s yesterday, with the outlook on the grade “negative.”

Och igår kunde vi se följande rubrik:

DJ Portugal Likely To Seek Bailout by June At The Latest – Official

För att idag kunna läsa följande från vargarnas alfahanne JPM:

The likelihood that the Portuguese government will fall this week looks high. This suggests that the sovereign will likely access the EFSF in the near term, despite the current government’s efforts to avoid this outcome.

Visserligen är det bara en tidsfråga innan Portugal och andra länder följer efter Grekland och Irland, men när man ser denna närmast koordinerade ‘attack’ för att försöka pressa fram en ‘räddning’ av Portugal så kan jag inte undgå att känna att något är i görningen med tanke på att vi VET att marknaden är så riggad och manipulerad.

Kanske är det, som jag spekulerade igår, att Tim och Ben desperat behöver blåsa nytt liv i den europeiska statsfinansiella krisen, åtminstone tillfälligt, för att undvika att dollarn kraschar igenom 75 och därmed skicka upp guld och silver. Hursomhelst så ser dollarn fortsatt otroligt svag ut och behöver artificiell hjälp, och det fort.

Här är mer information om JPMs senaste tilltag via ZeroHedge:

JPMorgan: “The Likelihood That The Portuguese Government Will Fall This Week Looks High”

There has been a lot of speculation about just what the JPMorgan note that claims the Portuguese government can fall as soon as tomorrow, says. The speculation can now end. “The likelihood that the Portuguese government will fall this week looks high. This suggests that the sovereign will likely access the EFSF in the near term, despite the current government’s efforts to avoid this outcome.” Incidentally if JPM is right, the market better have priced in the next insolvent domino to drop in Europe, although judging by where the EURUSD is these days, the market decided to take a long hard sabbatical about 2 weeks ago.

From JPM:

Portuguese government could fall tomorrow: EFSF access increasingly likely

Faced with increasing market pressure, the Portuguese government a couple of weeks ago announced a new set of fiscal measures aimed at achieving its ambitious plan to push the deficit to 2% of GDP by 2013. The new plan included additional tightening measures worth 0.8%-pts of GDP for 2011, and detailed spending cuts and revenue-boosting measures worth a total of 2.5%-pts of GDP for 2012 and 1.2%-pts of GDP in 2013. The plan was spelled out more clearly yesterday, when the finance ministry published its latest update of the Stability and Growth Program (see table below). According to the program, the government will achieve a rapid deficit reduction thanks to front-loaded tightening, which will push down the primary balance by 3.4%-pts of GDP this year and 2.4%-pts next year. Partly in response to the new measures, the government lowered its growth projections, and now sees GDP contracting 0.9% this year and growing at a modest rate over the following two years.

The announcement of the new measures received the blessing of the EC, the ECB and the European Council, but was not welcomed by the main opposition party in Portugal, the centre-right Social Democrats, which have blamed the government for acting without informing them in time. This poses a clear challenge as the current Socialist government led by prime minister José Sócrates is a minority government.

It looks like the Portuguese parliament will vote on the new fiscal plan tomorrow. Prime minister Sócrates has already announced that, if the plan is rejected, he will resign, something that will lead to a general election. The prime minister has been attempting to find a compromise with the opposition, saying that the current plan could be discussed and amended as needed, but the opposition does not seem to buy into this. The head of the Social Democrats Passos Coelho, who enjoys a lead in opinion polls, has been critical of the measures, despite mentioning that he fully supports Portugal’s deficit-reduction targets. This seems to suggest that his party would likely implement an equally austere plan, but in a new government structure.

The likelihood that the Portuguese government will fall this week looks high. This suggests that the sovereign will likely access the EFSF in the near term, despite the current government’s efforts to avoid this outcome.

Silver har åter igen stoppats kring 36 dollar, en nivå som vi skrivit om tidigare där det ryktas att JP Morgan har bestämt sig för att sätta stopp för silvers framfart då det annars skulle innebära gigantiska förluster. Skulle silver ta sig igenom och stänga över den tidigare rekordnivån 36,75 dollar kan det gå snabbt uppåt. De närmaste handelsdagarna kommer därför att bli mycket intressanta.

En del spekulerar i att JPM kommer att ta till med sitt sista trumfkort, en signal till sin ‘partner-in-crime’ CME om att införa en marginalhöjning, om man inte lyckas hålla tillbaka silver. Värt att notera är att det är optionslösen på måndag nästa vecka, vilket normalt ökar volatiliteten.

Här är en färsk silverkommentar från Dan Norcini samt en graf som visar på motståndet kring 36 dollar:

There were only 2 deliveries posted against the March Silver contract today bringing the total deliveries for the month to 980. I should note however this is the first day since the delivery process began that the March Silver contract did not see a reduction in open interest. Interestingly enough, it witnessed an increase of 5 contracts on Friday of last week. Apparently some guys are planning on taking some silver and decided that the market was going to move higher with the return of the risk trades. A total of 898 contracts remain open in the March.

The spread between the March, May and July contracts for all practical purposes is zero with the March and May trading even. I would watch out if March goes to a premium to the May contract as that would portend that there are issues related to the delivery process which are bullish for the market. Such a development would indicate that the longs are getting ready to squeeze the shorts.

This is getting interesting as the battle to contain the metal below $36 is heating up. The shorts had better hope that they can push the market away from $36 convincingly or they are in trouble.

Vad som också är intressant är att dollarn fortsätter att försvagas och ser riktigt usel ut. Här är en kommentar från James Turk i en färsk intervju med KWN:

There are so many important things happening here today, but what I am focusing on is how weak the dollar has been. The key is the dollar index took out its low from last November. The way I see it that means the dollar index is going to be closing in on its all-time low of 70.79. Here is the scarey part Eric, given how poorly the dollar is trading, I think we could see that low level very quickly.

The precious metals are giving a clear message, namely that the dollar is in trouble. Gold and silver are near their recent highs and this shows both markets, the dollar and the metals confirming the trend.

It’s not just the charts painting this bearish picture for the dollar, the fundamentals are atrocious. With Europe on the verge of raising interest rates and the Federal Reserve set in its ways keeping interest rates low as far as the eye can see, people around the world are going to increasingly dump the dollar.

At some point there is going to be a panic as the flight from the dollar moves from the relatively orderly retreat we are currently witnessing, to a stampede. The charts are telling me that panic is about to begin. As I mentioned in a KWN blog earlier this month, I believe the next leg down in the US dollar will shock the world.

Vad som möjligtvis skulle kunna sätta stopp för ett dollarras är om Portugal skulle tvingas krypa till korset och ansöka om en ‘räddning’, något som kan komma att ske innan juni, enligt en EU-källa.

Här är en graf över dollarn:

Att den senaste veckan har varit händelserik är definitivt inte att ta i. Sällan har vi beskådat ett så stort antal händelser som var och en normalt hade givits stor bevakning men där massmedia nu tvingas en del av dem så litet utrymme att de försvinner, givetvis mycket tack vare katastrofen i Japan.

Revolutionsvågen i mellanöstern/nordafrika har nästan helt kommit i skymundan. Ni har kanske noterat att Saudiarabien nu gör allt man kan för att fördröja den oundvikliga spridningen av revolutionen till landet och har som bekant inte ens dragit sig för att skicka in trupper i Bahrain, som i sin tur utlyst undantagstillstånd. Igår kände sig kungen illa tvungen att annonsera nya mutor till framförallt den arbetslösa delen av befolkningen. Det är svårt att undgå desperationen.

Världsekonomin, som mer eller mindre var på väg ner i avgrunden redan innan jordbävningen, kommer nu behöva en ÄNNU större injektion med fantasipengar för att fördröja nollställningen. Detta fick vi ett litet smakprov på igår när BOJ, FED, BOC med flera genomförde sin ‘intervenering’ för att stoppa yen-förstärkningen.

Och skulle vi få se en härdsmälta och dödliga halter med radioaktivitet svepa in över Tokyo är det inte ens säkert att dessa interventioner skulle kunna förhindra en finansiell kollaps. Låt oss verkligen hoppas att situationen stabiliseras och förbättras så snart som bara möjligt.

Som vi konstaterat flera gånger den senaste tiden så är det fascinerande att världens reservvaluta dollarn inte bara misslyckats med att stiga på dessa oroligheter och kastrofer (som alltid hänt tidigare) utan att den nu till och med brutit igenom stödet vid 76 på dollarindex.

En tre-åring kan se hur illa allt det här kommer att sluta. Fysiskt guld och silver är den enda finansiella försäkringen. Mat och förnödenheter kommer dock givetvis först.

Nedan är en graf över dollarn från Dan Norcini:

King World News har intervjuat stjärnförvaltaren John Hathaway som säger sig inte vara förvånad att se silver stiga till 50 till 60 dollar om Ben Bernankes kvantitiva lättnader fortsätter efter den 30 juni, dvs vad många kallar QE3.

Att vi kommer att få se QE3 är dock helt garanterat, eftersom det inte finns någon annan än Fed som kan köpa alla de statspapper som den amerikanska staten måste ge ut för att finansiera sitt gigantiska budgetunderskott på 1,5 biljoner dollar.

Silverinvesterare kan därmed se fram emot en mycket intressant vår. Att guld precis har brutit ut, och nu konsoliderar innan nästa uppgångsvåg, gör det extremt osannolikt att silver kommer att falla, och stanna där under en längre period, trots den senaste tidens kraftiga uppgång.

Det här är vad John hade att säga om silver:

Well it’s on fire obviously. Usually when silver does well you have a set of inflationary expectations. If we have a continuation of QE2 past June 30th, I wouldn’t be surprised to see silver in the $50, $60 an ounce territory.

Och om dollarn:

When asked if there would be a waterfall decline if the US dollar was to move down and take out the 71-72 area Hathaway responded:

“Yeah, I think that would be a real sign that people had given up on the dollar. The market would basically be telling you that the verdict is in and the dollar is in effect beyond redemption in terms of any sort of respectability and I think you’d see a huge move into gold at that stage.”

Som om det inte redan stod tillräckligt illa till för den amerikanska dollarn så meddelade Kina på torsdagen att man tar nästa steg för att etablera sin egen valuta som en av världens reservvalutor på bekostnad av dollarn. Ni kanske kommer ihåg att Kina de senaste året redan tagit ett par steg i denna riktning genom direkt handel mot euron, rubeln och snart rupeen.

Detta är en oerhört stor händelse, men nyheten verkar närmast ha mörkats av massmedia. Inte konstigt med tanke på de omfattande och allvarliga konsekvenserna för dollarn och därmed hela det finansiella systemet, som är så knutet till dollarn. Tror ni redan inser hur detta kommer att påverka priset på guld och silver. För de av er som inte redan gjort det rekommenderar jag att läsa intervjun med James Turk om dollarns framtid.

Här är mer information kring Kinas planer från ZeroHedge:

China “Attacks The Dollar” – Moves To Further Cement Renminbi Reserve Currency Status

In a surprising turn of events, today’s biggest piece of news received a mere two paragraph blurb on Reuters, and was thoroughly ignored by the broader media. An announcement appeared shortly after midnight on the website of the People’s Bank of China.

The statement, google translated as “Pragmatic and pioneering spirit to promote cross-border renminbi business cum on monitoring and analysis to a new level” is presented below:

Reuters provides a simple translation and summary of the announcement: “China hopes to allow all exporters and importers to settle their cross-border trades in the yuan by this year, the central bank said on Wednesday, as part of plans to grow the currency’s international role. In a statement on its website www.pbc.gov.cn, the central bank said it would respond to overseas demand for the yuan to be used as a reserve currency. It added it would also allow the yuan to flow back into China more easily.” To all those who claim that China is perfectly happy with the status quo, in which it is willing to peg the Renmibni to the Dollar in perpetuity, this may come as a rather unpleasant surprise, as it indicates that suddenly China is far more vocal about its intention to convert its currency to reserve status, and in the process make the dollar even more insignificant.

International Business Times provides further insight:

This is all part of China’s plan for the internationalization of its currency, which may, in the decades to come, threaten the global ‘market share’ of other currencies like the US dollar.

Previously, China also announced that bilateral trades with Russia and Malaysia will begin to be conducted with the yuan and the ruble and ringgit, respectively.

Other moves on the part of China to internationalize its currency include allowing foreign companies to issue yuan-denominated bonds and relaxing rules for foreign financial institutions to access the yuan.

Aside from the efforts of the Chinese government, fundamentals also point to the increasing international popularity of the Chinese currency.

China is already the leading trade partner with Australia and Japan. It’s also the leading or a large trade partner with many of its smaller neighbors. The purpose of having foreign currencies is to conduct foreign trade and investment, so the yuan is expected to become a more attractive currency for China’s trade partners, espeically as the government continues to relax restrictions.

The reason for this dramatic move may be found in what Stephen Roach wrote a few days ago inProject Syndicate:

In early March, China’s National People’s Congress will approve its 12th Five-Year Plan. This Plan is likely to go down in history as one of China’s boldest strategic initiatives.

In essence, it will change the character of China’s economic model – moving from the export- and investment-led structure of the past 30 years toward a pattern of growth that is driven increasingly by Chinese consumers. This shift will have profound implications for China, the rest of Asia, and the broader global economy.

Like the Fifth Five-Year Plan, which set the stage for the “reforms and opening up” of the late 1970’s, and the Ninth Five-Year Plan, which triggered the marketization of state-owned enterprises in the mid-1990’s, the upcoming Plan will force China to rethink the core value propositions of its economy. Premier Wen Jiabao laid the groundwork four years ago, when he first articulated the paradox of the “Four ‘Uns’” – an economy whose strength on the surface masked a structure that was increasingly “unstable, unbalanced, uncoordinated, and ultimately unsustainable.”

The Great Recession of 2008-2009 suggests that China can no longer afford to treat the Four Uns as theoretical conjecture. The post-crisis era is likely to be characterized by lasting aftershocks in the developed world – undermining the external demand upon which China has long relied. That leaves China’s government with little choice other than to turn to internal demand and tackle the Four Uns head on.

The 12th Five-Year Plan will do precisely that, focusing on major pro-consumption initiatives. China will begin to wean itself from the manufacturing model that has underpinned export- and investment-led growth. While the manufacturing approach served China well for 30 years, its dependence on capital-intensive, labor-saving productivity enhancement makes it incapable of absorbing the country’s massive labor surplus.

Instead, under the new Plan, China will adopt a more labor-intensive services model.It will, one hopes, provide a detailed blueprint for the development of large-scale transactions-intensive industries such as wholesale and retail trade, domestic transport and supply-chain logistics, health care, and leisure and hospitality.

Obviously, a reserve currency would be not only extremely useful, but quite critical in achieving the goal of China’s conversion to an inwardly focused, middle-class reliant society. And even that would not guarantee a smooth transition. However, should China really be on a path to a step function in its evolution, the shocks to the system will be massive. Roach puts this diplomatically as follows:

But there is a catch: in shifting to a more consumption-led dynamic, China will reduce its surplus saving and have less left over to fund the ongoing saving deficits of countries like the US. The possibility of such an asymmetrical global rebalancing – with China taking the lead and the developed world dragging its feet – could be the key unintended consequence of China’s 12th Five-Year Plan.

A less diplomatic version implies that the relationship between China and the US would suffer a seismic shift in which the game theoretical model of Mutual Assured Destruction, and symbiotic monetary and fiscal policies, would no longer exist, allowing China to pursue its fate completely independent of any economic shocks that the increasingly distressed United States may be going through.

And confirming that the PBoC announcement is far more serious than the amount of airtime allotted to it by the mainstream media, is the just released article in Spiegel “China Attacked the Dollar” (google translated):

The Chinese central bank surprised with a spectacular announcement: The would-be superpower wants to handle their entire future foreign trade in yuan, not in dollars.Beijing shakes America’s claim to represent the key currency – with serious consequences for the U.S..

The announcement was inconspicuous , but it has the potential, to permanently change the balance of power on the world currency market: China strengthens the international role of the yuan. All exporters and importers will, this year, be allowed to settle their business with their foreign partners in Yuan, the central bank said on Wednesday in Beijing.

This will respond to the growing importance of the yuan as a global reserve currency.“The market demand for cross-border use of the yuan rises,” said the central bank. The PBoC had previously tested this plan by allowing 67 000 enterprises in 20 provinces to run their business abroad in yuan. The trade volume amounted to the equivalent of €56 billion.

Now the amount of yuan to be extended, it should be handled much more business in Chinese currency - and less in the U.S. Chinese companies trade at present often in dollars, they are thus dependent on the decisions of the U.S. Federal Reserve to pay on it in a rising oil price and will have pay higher transaction fees than necessary. That should change now.

Currently, the People’s Republic can hardly take yuan out of the country and even that is monitored within the boundary of all legitimate capital flows. Chinese exporters have to change a large part of their euro, yen or dollars at a fixed rate revenue in yuan. Foreign companies wishing to do business in China must do so in Yuan, they can exchange their money in the People’s Republic. Tourists are allowed a maximum of 20,000 yuan and exporting. Yuan an international market can not occur – and not on supply and demand-based exchange rate.

Needless to say, should the yuan be seen increasingly as a reserve currency, all of this, and virtually everything else is about to change.

The only question is whether or not the Yuan will cement its status at the top of the currency pyramid by allowing the backing of the currency with individual or a basket of commodities. If that were to happen, it would be the last nail in the coffin of the already terminally ill dollar.

King World News har intervjuat James Turk som observerar att dollarn har format en gigantisk topp de senaste 2,5 åren och nu ser ut att stå inför en kollaps som kommer att chocka världen. James kommenterar även guld och silver och upprepar sin prognos om ett guldpris på 1800 dollar i år.

Det här är vad James hade att säga om dollarn:

I am looking at the weekly chart for the last 2 1/2 years and my conclusion is that the dollar is forming a massive top.  If we stop to consider that gold was rising while the dollar was basically going sideways during this period of time, imagine how rapidly gold will rise when the dollar starts falling.

What I’m watching here very carefully is how the dollar is reacting to events in the Middle-East and higher commodity prices.  Brent crude is presently $115 and that is signaling higher inflation.  It’s a signal that everybody around the world is watching.  So watch the dollar index closely.  It broke below 77 and the chart is starting to look heavy.  

Eric you have been saying all along that the dollar isn’t bouncing and it now appears the dollar is ready to fall off of the edge of a cliff.  The dollar collapse is going to be the next big story.  If I am right and the dollar really starts to dive, the implications are global in nature and I truly believe this event will shock the world.

Om guld:

To me the most important thing is this huge base that we now have in gold under $1,400.  I see it as a major launching pad that could easily take gold to my $1,800 target for this year.  

Om silver:

I think the major message in silver is that every dip is well bid for.  The shorts and other big players may gun for stops from time to time, but they can’t change the underlying trend, or the very bullish fundamental picture.

When the gold and silver markets start becoming disorderly, then we will know the metals are going to take a breather.  But everything at the moment says we should be focusing on higher prices for both gold and silver.    

Kommentar från Eric King:

71 to 74 is seen as the last support if the dollar heads lower.  If that support fails and the dollar breaks 71, then a waterfall decline with panic selling could come into play.  Turk is right, that event would shock the world.

I en intervju med King World News noterar James Turk att dollarn hänger vid ett stup just nu och att om vi bryter ner genom 77 på dollarindex så kan det gå riktigt fort utför och givetvis det motsatta för guld och silver.

Turk påpekar att dollarn alltid varit en tillflyktsort under perioder av osäkerhet, så med tanke på att den knappt lyckats lyfta efter den allvarliga situationen i Nordafrika och Mellanöstern är det så långt ifrån ett styrketecken man kan komma. En dollarkollaps kan vara nära förestående.

Här är intervjun med James Turk:

The dollar right now is hanging on the precipice.  If we break below 77 on the dollar index, look out below.  I don’t think people really appreciate how scary the dollar chart is here, or how ominous the implications really are.  There’s no predicting how far the dollar could plunge if confidence breaks.”

You’ve got civil war breaking out in North Africa and you have rebellions happening in the Middle-East.  In this kind of geopolitical situation, in the past the US dollar would always rally, but this time it can’t even bounce.  You know Eric the other side of this coin is that if the dollar falls off the edge of a cliff, precious metals are going to skyrocket.

Om silver: During the most illiquid time of the trading day, somebody decided to take out all of the stops in silver.  If you were not following during business hours in the Pacific Ocean you missed it.  I woke up this morning and looked at the chart and couldn’t believe what happened while I was sleeping.

The important point Eric is that no technical damage was done and in fact the situation has become even more bullish because that little smack down overnight took out all of the weak hands.

With this month’s important options expiry now behind us, I’m looking for higher prices next week.  Even though the March/May spread has flattened a little, the backwardation continues to grow to 2015 and has ballooned further to $1.16.  The short squeeze is continuing to develop.  The shorts are trapped and whether the trap springs this week or in a month or two I don’t know, but we are getting very close.

Om guld: While silver did get hit in overnight trading, gold hardly moved and then snapped right back.  Remember I said last time that the gold chart is beginning to look really strong, that is what the event last night displayed.

Gold is incredibly resilient and looks coiled for an explosive move higher.  We started our initial probe of the all-time high this week closing in on $1,430 before backing off.  Look for another probe of that $1,430 level very soon.  It won’t be long Eric before we take out that all-time high, particularly if the dollar falls off the edge of a cliff.

Här är en graf över dollarindex med kommentarer från Dan Norcini från i onsdags:

I mentioned yesterday in my comments that the Dollar was very weak even in the midst of what was most certainly a day in which risk trades were being pulled off and a rush to safety was underway.

Normally during such events, the Dollar along with the Japanese Yen, tend to be the beneficiaries of such activity. All that the Dollar could do was to end up a few points after spiking initially almost 100 points higher. That sort of activity was very telling and indicates that the safe haven bid for the Dollar was practically non-existent.

Today, with crude oil soaring, the broad equity markets, particulary the Nasdaq, getting slammed, and increasing unrest in the middle East as fear grows about the stability of Saudi Arabia, the Dollar is actually getting sold off. That is most remarkable.

I am thinking that the market is looking at the fragile state of the US economy and voting that rising oil prices are going to hit the US harder than most others. Keep in mind, that this is an “economic recovery” built almost completely around the Fed’s massive liquidity injections through its QE program. That liquidty is being eaten up by rising crude oil prices as if by a munching PacMan.

It is as if the Fed is pouring water into a container full of holes punched in it by a awl with the words “crude oil” engraved on the handle.

As I am writing this, I am also noticing that the long bond is fading quite dramatically from its best level of the session. That too will bear watching.