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market vibes

October 22 …)  

“Winter is coming” the motto of House Stark

In the news 

Leaders representing half of Earth in terms of population, GDP, and trade are meeting in Kazan Russia as I write. In my opinion they are meeting because they believe they can provide their people with a better life without the west than with it. For the last seven decades these nations have been “clients” of the west albeit competitors, too. They are unhappy with the old relationship and like all clients when they are unhappy, they leave.  

There’s plenty to read online incuding this summary from CNBC (link).

However, the point of the spear is gold, including convertibility, and breaking the iron grip of SWIFT. I have said often, and I believe I am correct, this will ultimately be a new “Bretton Woods” agreement.  

In other news: Citi says exposure to S&Ps is at very high levels: “We’re not suggesting investors should start to reduce exposure, but the positioning risks do rise when markets get extended like this,” they said via BBG this morning.  

And…Courteous disputation continues among FOMC speakers with a clear schism between those who say two cuts this year and those who say “whoa” slow down. It would better if they said nothing, imo.  

In the markets 

The dollar just keeps going up. Usually moves of this magnitude carry intelligent narratives validating policies or economic development. Not this one. My guess is a looming recession in Europe and the Wall Street TBTFer’s stock boom narratives are colliding. And Japan’s return to zombie economics to stave any threats to the yen carry is key. Pundits are blaming NY FX traders. I didn’t know they still exist.  

In other markets, lower bond prices and higher gold, once a strong corrlation in force in the 1970, is back 100%. The implication is stagflation which in fed speak is soft landing. Let’s check it out.