Fed panic signal to watch for

The canary warning for a possible risk off market will come from higher unemployment, with a bond market sell off, followed by a significant FED rate cut.


Jay Powell (Chairman of the Federal Reserve) said if the unemployment rate reaches +4.0% (currently 3.8% to 3.9%), the FED inflation goals will have to be sacrificed to attend to employment goals. 

Confirmed employment risk will occur when unemployment continuing claims continue to rise.

A leading data point for continuing claims is the NBER small business future hiring plans survey. Recently, this has jumped higher (note: the data on the chart is inverted), and if it holds these levels, it signals higher continuing claims in the months ahead. 

The 3 month and or the 10 year Treasury note can signal rate cuts are near by their immediate significant sell down. The last three FED rate cutting cycles (years 2000, 2007 and 2019) either the 3 month or the 10 year Treasury paper sold down hard before the FED cut rates. In all three circumstances, continuing claims showed a greater risk to employment by trending higher.   

Not all rate cuts lead to a hard risk off recession corrections. Yes, 2007 (housing crisis) and 2019 (COVID) surely did, but 2000 started off mild and was later assisted by middle east war risks (resulting in higher oil prices). The reader should notice how late stocks reacted in all years referenced (2000, 2007 and 2019) after both the 3 month and 10 year Treasury markets sold down.

POINT: The bond market new first!

Rising rates, holding rates on pause after hikes, or even the first 75 basis rate cut are not all ways bearish for risk on assets. But when the 3 month TBill rate is falling faster than the 10 year Treasury bond (yield curve steeping) then this will be clearly seen as the dawn of risk off. 

This point is keep an eye on the 3 month, 10 year and leading employment data for clues for the dawn of risk off for asset markets. 

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Gold stocks ready to move

The FED at the March 2024 FOMC suggested that this rate hiking cycle has peaked.



Chart 1 - Interest rates may have peaked for this cycle. This is important as precious metals need to know higher rates are over and are likely on the way down. 

Chart 2 - HUI to GOLD ratio. Shows extreme undervaluation of gold stocks to the gold metal. Confirmed by the current cycle low. 

Chart 3 - Japanese Yen suggests a weaker US dollar is expected in the months ahead. 

 Chart 4 - The long term Dow daily cycle looks ready to extend. Gold stocks require the wider stock market to rise at the same time. 

Chart 5 - Junior gold stocks Richard Wyckoff bottom accumulation looks fantastic and ready to explode higher.

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Long term bond games will send investors into gold

The mighty US of A has $10,000,000,000 (trillion) of US dollar debt to sell this year.


It is only February 2024, and the 20 yr and 30 yr bonds are not being swamped with demand. 


Chart 1 - Ugly auction, this trend will continue until Yellen bends the knee.

Chart 2 - 10 yr interest rates near multi decade highs.

It seems that with interest rates near 4.25% (10 yr) and the US dollar (DXY) near $105, this does not encourage foreign investors to buy long term US Treasuries. Therefore, either or both the interest rate needs to rise and/or the US dollar needs to fall to encourage investors to by 20 yr and 30 yr US Treasury auctions. 


Chart 3 - Rev Repo has fallen from $2.2 trillion to near zero.

The US Department of Treasury has been using the cash in the temporary reverse repo to transfer US debt to investors as TBills. This will be over by April 2024. Next, they can use the Treasury checking account (TGA) for another $800M. Then what? A much lower US dollar is an option.

Of course a trending lower US dollar will fuel gold move to higher, this of course will improve the profits of gold and silver stocks. 

Chart 4 - XAU building higher lows.

Chart 5 - GDXJ base building.

Also, US corporations are soon to hit a re financing wall with much higher interest rates (up 100%). Higher interest expenses will result in fewer people employed. Rising unemployment in an election year will not be attractive, hence another good reason to lower interest rates and the US dollar.


Chart 6 - Corporate interest expense to explode soon.

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2024 soft landing working it

Can it last? Can the US Gov keep the plates spinning until US 2024 elections.



Chart 1 - Gov debt holding up business activity. 

Chart 2 - Gov doing all the hiring!

Chart 3 - ISM Services PMI holding up business, manufacturing recession continues (or going to Mexico)

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Market moving macro in 2024

It is time for the FED to hire Jordan Belfort (Wolf of WallStreet fame) to sell US government debt.
After all, Jordan Belfort is a man who can sell tea to China.


Chart 1 - The red line generates the income to pay interest on the blue line. If the rate of change of debt growth and the cost of debt are an ever increasing burden on the cash flow generated by growth, something is going to structurally break. Gold near $2,000 USD is a bargain (same price as 2011)!

Chart 2 - Here is a smarter chart of Chart 1 above. When the fat red line sinks and falls below zero, this is a period of time when the rate of change in debt growth is much faster than GDP (not adjusted for inflation). Gold says this matters. The gold price moves higher in such an environment. 

Chart 3 - China CPI is in deflation (CPI below zero). The FED broke China! President Xi recently visited the USA and met with some heavy hitters to help re-inflate China. It is mostly likely to coordinate Chinese stimulus with US election year stimulus. China cannot afford the negative effects of prolonged deflation periods.  

ZH summary says it all.

Which means China now has two options: pretend that the failed policies it has been doing (or pretending to do) so far has been successful, which it likely will until there is just too much blood on the streets, or it will finally capitulate and unleash the biggest fiscal stimulus ever seen in China: we are talking multiple trillions here, and in dollars not yuan, consequences be damned, because we are nearing the point of peak panic where Beijing will do anything at all to buy social order and stability for just a few more months. And once all those tens of trillions in Chinese deposits start fleeing, that's when the real meltup in non-fiat assets - read gold, silver, crypto, fine art, wines, etc - will truly start.

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