Enough Consolidation Already!

Stocks are readying another push higher, and not just on the heels of the still accommodative Fed. The Fed won‘t simply remove the punch bowl, let alone discuss removing it, and will keep repeating the transitory inflation mantra ad nauseam. The ingredients are in place for a continued upswing in stocks and commodities.

Look for nominal yields to continue rising, and my hunch is that won‘t be enough to turn the dollar around. We‘re about to experience continuously rising inflation expectations, rising nominal yields, and declining dollar:

(…) When even Larry Summers starts talking the dangers of an inflationary wave, things are really likely getting serious down the road.

(…) we‘re in the decade of precious metals and commodities super bull runs – and these are well underway. The debasement of fiat currencies against real assets is set to continue, and will accelerate given the unprecedented fiscal and monetary support already and ahead – sorry dollar bulls, the greenback declines are resuming – just look at the yen and yields nodding to the metals upswing.

And the emerging markets are embracing the unfolding currency moves – they are rising with more vigor than the Russell 2000 lately. Little wonder for they are farther from their prior highs than the small caps. When it comes to S&P 500 sectors, yesterday brought us a rare rotation out of tech while the heavyweights still eked out minor gains – and that rotation is as telling a sign of a risk on sentiment returning as much as the credit market performance is.

The key more in the gold sector was in the miners, whose continued resilience is a good omen. In other words, what a recovery from the daily setback I covered amply between the regular trading sessions on Tuesday and Wednesday. Enriching the examination with copper and yen performance, let alone real yields, leads to a universally bullish verdict on the precious metals upcoming price path.

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