Gold Spikes After Fed's Kaplan Says "Market Correction Could Be Healthy"

Gold is spiking, USDJPY dropping, and stocks leaking lower after Dallas Fed's Kaplan dropped some serious tapebombs ahead of Yellen's speech...

Speakingon Bloomberg TV, Kaplan headlines wwre as follows...

  • FED'S KAPLAN: WE CLEARLY ARE ACCOMMODATIVE RIGHT NOW
  • KAPLAN: INVESTORS USED TO IDEA RATES WILL BE LOWER FOR LONGER
  • FED'S KAPLAN: MARKET OR REAL-ESTATE CORRECTION COULD BE HEALTHY
  • KAPLAN SAYS MARKET CORRECTION WOULDN'T NECESSARILY HURT THE ECONOMY, AND MAY HELP IT
  • KAPLAN: WE SHOULD BE MOVING ON B/SHEET AS SOON AS POSSIBLE
  • KAPLAN: FED CAN SHRINK B/SHEET WITH MINIMAL IMPACT ON MARKETS

And the reaction was swift...

Gold spiked and USDJPY tumbled...

 

Bonds were also bid... but stocks barely budged?

Comments

Honey-Badger (not verified) Muslimania Fri, 08/25/2017 - 10:05 Permalink

Short gold during Yellen speech, I normally go JDST or DUST 15 minutes prior and sell shortly after she's done.Easy 3% - 5%Edit: Watching Sushi, decided to hop in DUST at 25.60 early tight stops.Edit 2: Stop triggered, looking to jump back in cheaper.

In reply to by Muslimania

Iskiab tmosley Fri, 08/25/2017 - 10:11 Permalink

Their thinking isn't backwards, it's just that the stock market /= the economy. Compare domestic sales of the stock market companies to gross GDP, the difference are things like small business that are essential to the economy.

That's why political crony capitalism can be so damaging. By subsiding large companies small business can suffer, and small business are the largest employers in the economy. The whole confusing economic success with stock market success is part of a PR campaign by large business, and the stock market is nothing more than a leading indicator of a recession, not a measure of success.

In reply to by tmosley

tmosley Iskiab Fri, 08/25/2017 - 10:20 Permalink

No, they do have it backwards. They think growth is fueled by spending. It isn't. It is fueled by SAVING. By discouraging saving, they have made growth all but impossible. Just M2M nonsense. Real growth can only come when people contribute to the economy by earning money, and then HOLDING that money rather than immediately taking real contribution back out of the economy. Real contribution to the economy will be turned to capital to provide a greater lever on labor, making production easier, making goods and services cheaper, and making everyone's money worth more.Yes, the stock market isn't the economy. It's just a sideshow that has been turned into the main event thanks to the utter ignorance of our economic policymakers.

In reply to by Iskiab

Iskiab tmosley Fri, 08/25/2017 - 12:05 Permalink

Yea, I somewhat agree but disagree with monetarism on this issue because it's not savings that become productive assets, it's investment. Right now the excess money isn't turning into investments which is where the theory falls apart. Large companies are sitting on cash, at the end of the day the driver is investment and productivity and not savings.

In reply to by tmosley

tmosley Iskiab Fri, 08/25/2017 - 12:33 Permalink

Savings IS investment. It is the investment of goods and services that can then be consumed by those who will produce capital goods instead of goods for their own (effective) immediate consumption.Don't make the mistake of thinking that dollars in a bank account are stable savings. The idiots in power debase that savings to try to create more demand--more consumption. This destroys capital investment, misallocating resources towards immediate consumption.Read "How an Economy Grows, and Why It Doesn't". Should be able to find it for free online. Laid out in a very easy to understand manner.

In reply to by Iskiab

Quinvarius Fri, 08/25/2017 - 09:30 Permalink

If the Fed reduces their balance sheet, it will have nothing to do with selling anything.  Their balance sheet is whatever they say it is.  There isn't a market for what cnetral bankers have to sell--Not at these prices.

Give Me Some Truth Latitude25 (not verified) Fri, 08/25/2017 - 12:00 Permalink

Re: We'll never know how high prices would have gone if a giant invisible hand didn't hold them down ...Good point. Gold and silver are NOT ALLOWED to rise more than 1 percent in a day. However, they are allowed to FALL more than 1 percent in a day. In fact, they are allowed to fall more than 2 or 3 percent in a few seconds ... all the time. It happened this morning with silver.Ever read that Stephen King book (or see the mini-series) about the town that was encased in an invisible bubble? That's the force that gold and silver run into on a routine basis. 

In reply to by Latitude25 (not verified)

Conax Fri, 08/25/2017 - 09:54 Permalink

Silver just moved 45 cents in two minutes with a volume spike of about 400,000 contracts traded to do it.  (NetDania charts) Whoever said they are losing control hasn't seen them jerk the steering wheel lately.  We are Blessed.