We seem to have reached an intermediate-term extreme in revulsion for the Federal Reserve note. It seems to us that the status quo of the currency markets is highly dependent on the Federal Reserve accommodating the market’s perception of it. Here, I present the usual Federal Reserve balance sheet charts and briefly outline why we continue to anticipate a short-term rally in the dollar.

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For about four days the financial markets have been experiencing some kind of relief rally. Or, if the term ‘rally’ is too strong for you, then you might say that the price action hasn’t been completely disastrous over the past three or four days. Here, I present an update of the usual daily treasury statement charts. The lagged charts are suggesting that this ‘not completely disastrous price action’ could continue for another two weeks or so.

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Robert Prechter was interviewed on Bloomberg TV today. Two months ago he was interviewed by Curt Renz (June 14th) and said that the technical picture for the stock market was terrible (I believe he said that US equities were in ‘Free Fall Territory’). Even if you view the subsequent market crash as mostly coincidental, you must admit that it was rather spooky timing! See below for the video and summary.

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Mr Doubter, otherwise known as the child who pointed out the Emperor’s lack of clothes, has always played a key role in monetary affairs. However, the tools with which he has done his doubting have evolved over time. Here, I detail the means by which alert speculators have questioned the currency systems of the past, and the means by which they question the irredeemable fiat currency systems of today.

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Marc Faber was interviewed by Bloomberg TV yesterday about the Fed’s decision not to engage in QE3, equities, bonds and commodities. An interesting interview, see below for the video and summary.

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The ongoing chaos in London has been widely covered by the press over the past few days. Unfortunately, the lenses with which the consensus views the world have muddled the reality of the situation. Rather than considering this to be another development in a long story of souring social mood, commentators have reported it as random violence — to be likened to a strike of lightening… To be sure, we don’t think that the specifics of the last few days could have been predicted with any precision, but we scarcely consider the ordeal to be a ‘surprise’ as such! Here, I consider the decline in social mood in the developed world and outline the implications for its great ‘international’ cities. continue reading »

Somewhat contrary to our guesses late last week, the futures markets are suggesting that another ‘risk-off’ day could be coming (of course, this could easily be reversed later today!). As we say, the timing of very short-term daily fluctuations scarcely plays to our aptitudes!

 

However, the Russian MICEX index continues to display weakness. Inline with the views expressed in our June 2011 newsletter, the index broke through the May low (on Friday), and seems to be continuing lower…

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