High Plateau Drifter writes us,
This past Sunday, the Dudley, head of the Federal Reserve Bank of New York and the second most powerful member of the Federal Reserve gave a speech. Now usually the Dudley doesn't come out of the closet often (double entendre intended!) excepting only at turning points in policy and markets. He announced that the Fed open market operations - which he controls - would prevent the Dollar from rising, thus announcing that the USD will effectively enter the currency war allong with all the other currency warriors, thereby negating any rewards from that confict and joining forces behind the as yet slow paced race to the inflationary bottom along with all the other warring currencies.Getting the bond market right is the only thing that matters.
Over the last three trading days in response the bond has fallen in price while the Dollar moved sharply lower.
On the daily chart the Dudley has given us a higher low on the bond, so following my rule, I have a small marker position in TBT to see what happens next. My thinking is that the Dudley has changed the environment, and as Goldman notes in the ZH synopsis, we are now using monetary policy to target the dollar. While this policy shift might not seem dramatic, it will prove to be of utmost importance. What with China, Japan, Draghi and all the others trying to destroy their currencies relative to the dollar, and the Dudley promising to keep pace, I no longer feel confident that I will get my hoped for significant correction to re-enter the GDXJ.
Of course this policy shift means more repression for savers and ever more severe wage repression against the Trump voters, as real inflation at about 7% keeps their real incomes and wages falling. Frankly. I am amazed that Trump would even want the job given what the next four years are likely to bring.