Equities holding Crude Cratered

FedH4 report on assets

We have been posting our Crude Oil futures charts and we have left our notations up for review and seeing as $115 held on the upside and now we are south of $100 we would suspect further bailing. We like the $88 level initially and here is why:

We know now that recession fears = the “bad news is now good for equities trading news” as many believe the FED will have to stop short of their rate hike expectations. We are also in that camp that believes the FED doesn’t really have any room and you can read our pinned post entitled “Base Case Fed Funds,” where we outline our rationale.

Anyhow its no surprise that crude has fallen given these new recession expectations which are solidly entrenched in the new Atlanta Fed GDPNow chart:

We already know both Gold and Silver have already taken a beating and are coming up on some key technical spots here, $1720 in Gold and $18.80 in Silver (which held today btw):

No, we don’t believe that story out of Uganda of a massive gold find either, the skeptics in us feel like that is a front running narrative story for all the Tungsten bars out there that exist because of all the rehypothecation and fakery that has gone on for far too long. Ironically and this is the funny thing about gold, is that we dig it up and mine it, to just bury it again in vaults…funny how that works isn’t it. Well we think that story stinks to high heaven and we would rather believe that there is more uncovering to come when fiat currencies truly do indeed collapse.

Anyway with summer here, the markets are solidly in consolidative and work off mode from their first half of the year trends. Equities seem to be holding up and Commodities seem to be giving up ground and Bonds have even showed some life as US Govt 10 yr yields are down 60bp from their recent highs. A significant move here signifying the very levels we suspect the Fed can’t cross given the size of the interest costs for the US treasury:

Keep all of this in mind and realize that every day the FED pays out nearly $250 million in interest risk free to participants of their Repurchase Programs…That’s a lot of new money each day isn’t it? So much for balance sheet reductions right? Here is the FED H4 report, showing any and all reduction are coming in the form of MBS:

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