US Dollar Index

There’s more than a whiff of 2008 in the air. The sources of systemic financial sector risk are different this time (they always are), but China and the global industrial/commodity complex are even larger tectonic plates than the US housing market, and their shifts are no less destructive. There’s also more than a whiff of 1938 in the air, as we have a Fed that is apparently hell-bent on raising rates even as a Category 5 deflationary hurricane heads our way, even as the yield curve continues to flatten.

We are currently in a transitional phase of geo-political-monetary power struggles, capital flow decisions, and fundamental economic choices. This remains a period of artisanal (central bank fabricated) money, high volatility, low growth, excessive wealth inequality, extreme speculation, and policies that preserve the appearance of big bank liquidity and concentration at the expense of long-term stability. The potential for chaotic fluctuations in any element of the capital markets is greater than ever. The butterfly effect - the flutter of a wing in one part of the planet altering the course of seemingly unrelated events in another part - is on center stage.

But Gold and Silver I figured were dead in the water until the Fed announcement on December 16^th and they both showed signs of life from the long side on Friday.

They aren`t about to stand for a strong dollar in a world where it is a competitive advantage to devalue currencies from a multinational profits, tourism and global trading perspective.

The IMF will decide if it's 'Game Over' for the reserve status of the Greenback...

The Federal Reserve has been telegraphing to markets that they are going to raise the fed funds rate by 25 basis points next month at its December Fed Meeting.

EURUSD just broke to a 1.05 handle, its lowest since April. With EURUSD now down 9 big figures from Draghi's mid-October jawboning, the US Dollar index (heavily-weighted to EUR) is soaring, reaching back above to its highest since March. Bearing in mind that Fed's Fischer says that the worst of USD's impact on the US economy is yet to come, we may have a problem.

Fed Speak became hawkish to telegraph to financial markets that the December meeting was a potential live meeting for a rate rise.

"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason."

listening to the ECB panel trying to justify more stimulus of bond buying in their herculean fight to save ‘low’ inflation from damaging European citizens was just pure comedy beyond a Monty Python skit.

A review of the technical condition of the dollar in the days leading up to the FOMC meeting announcement.

Another day, another technical breakdown, only this time not for the US but for the entire world. As BofA points out, "the weekly global A-D line shows a 2011-style breakdown", which it notes "is a market risk", although it remains unclear if central banks, and China's National Team in particular, use technicals when deciding to manipulate stocks.

In the last few weeks, we have seen what looks like a transition from deflationary behavior to a more traditional behavior in which gold acts as the "anti-dollar". I don't think this represents a sea-change--I still think there is more deflation to come. But we might see a change in behavior for some time before deflation returns.