The Trump Narrative Is Dying (as I Predicted)

Remember what the Trump story is all about? His policies will drive economic growth higher, inflation will rise, the Fed will need to raise rates faster and the dollar will soar. To see the story, all you had to do was look at short-term U.S. interest rates which were climbing fast after years of stagnation and deflation worries under Obama. That’s why the Trump trade is also known as the inflation trade. Buy stocks and the dollar and sell bonds and gold because bond yields are going higher.

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COMEX Speculators Aggressively Dump Gold

As I noted last week, I think we have seen the bottom in the gold correction. More evidence of that came today with the release of Friday trading data from COMEX. Last week, as the gold price began to fall towards its 50 day moving average where corrections usually end or breakdowns can begin, COMEX Speculators blew an enormous number of contracts out the window.

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Follow the Money, Not Trump

My regular readers will know my argument that the stock market is highly over-valued and that stock market performance is all about, and only about, loose central bank policy. The Fed has stopped money creation via QE and has started to raise interest rates. I have therefore been expecting the market to figure out that the reason for higher stock prices is leaving the building, leading to a serious stock market correction. Today we got new highs instead which makes me wrong at the moment. But my thinking has not changed. Central bank policy is still driving the bus and it is not going to work for much longer.

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