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Questioning The Generally Accepted Narrative

by Turd Ferguson, TF Metals Report:

One of the primary themes that we’ve been repeating is that 2017 is going to be a wildly unpredictable year. To that end, today we begin what might be a wildly unpredictable week. Buckle up.

So, let’s see. What are some of the primary tenets of the heavily-promoted “Generally Accepted Narrative”?

Major US deficit spending will promote economic growth
This economic growth will allow The Fed to hike the Fed Funds rate 3-4 times
Rates on the long end will rise, too, as “the bond bubble bursts”
All of this growth and higher rates will prompt a huge rally in the dollar
And the US stock market will charge toward 25,000 on the Dow.

Let’s check in on these as we’ve now reached the second half of January.

Major US deficit spending will promote economic growth. This economic growth will allow The Fed to hike the Fed Funds rate 3-4 times.” — Well, we’ll see about this. There have not been any specific proposals put forth yet by Trump and some of the economic and confidence numbers are already beginning to roll over. Here’s today’s economic datapoint for your consideration:
http://www.zerohedge.com/news/2017-01-17/trumphoria-fades-empire-fed-manufacturing-survey-signals-more-stagflation

And, regarding The Fed, let’s not forget these two charts:

Rates on the long end will rise, too, as “the bond bubble bursts“. Well, this isn’t working out so well for the Narrative Pushers. As we’ve been observing, long rates are moving lower as bonds are bought, not sold, and the so-called “bond bubble” is alive and well. As you can see below, since the first of the year, the rate of the 30-year Long Bond has fallen from 3.11% to 2.93% and now threatens a complete reversal back to where it was before the US election. Yes, we will continue to watch this very closely in the weeks ahead.

All of this growth and higher rates will prompt a huge rally in the dollar.” And here is where The Narrative Pushers are really failing. The conventional wisdom holds that the POSX is going to 110+ as the euro and yen both fade under the weight of their own issues. Well, not so fast my friend. As you can see below, The Pig has already fallen rather dramatically in January and, if it falls back under 100, the Pig bulls are really going to have to start questioning themselves.

Read More @ TFMetalsReport.com

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