This is the Carney Carnage!

This is the Carney Carnage!

It looks like the event I had forecast will come to pass very soon – the UK will get a lower policy interest rate (and that justifies the carnage in sterling).  There is talk that the announcement may arrive by the end of next week.

Yes, the Carney Carnage is well under way.  Today, he announced a new credit line of £150 Billion to the UK banks ‘for them to get lending!’  Apparently, Britons do not have enough debt and need a ton more.  He is using the only game in their playlist they have – push on that string, baby!

In fact, UK household debt is currently 130% – and climbing – of disposable income and is among the highest in the world.

But in the same breath, he notes that UK borrowers are up to their eyeballs in debt and many households are extremely vulnerable to any variation in their circumstances (such as a lay-off). He also predicts GDP will be under pressure because of Brexit and advises households to be ‘prudent’.

He evidently seems to think that jobs will be under threat in the near term.

So let me get this straight: Carney is urging the banks to go out and lend, lend, lend while at the same time he acknowledges that everyone is maxed out on their credit cards – and many in danger of losing their income shortly. Hmm.

Sounds like a repeat of the sub-prime fiasco is coming down the pike.  Remember that?  If you could fog a mirror, you could get a loan!

No wonder the age of the omniscient and omnipotent central banker is coming to an end – a theme I have been banging on about for ever, it seems.  How can anyone take what they say seriously when they are so confused and sending diametrically opposed messages in the same breath?

I really don’t think this will end very well.

Anyone who had the foresight to buy some gold and/or silver are being well rewarded in sterling terms.  Not only are the dollar prices on the rise, so is the dollar.  Nice work.


Iron Ore surprises (almost) everyone

With China’s economy slowing fast, bullish sentiment towards iron ore has plunged.  Steel prices have been trending down for months – and is given as the reason the South Wales steel works shut down.  China has been accused of dumping below-cost steel abroad to reduce their stockpile mountain. So the travails of the steel industry are well rehearsed.  Conventional wisdom has it that demand for the raw ingredient iron  ore has collapsed.

But look at the chart:

The rally off the Dec low when sentiment was at rock bottom is in a clear five up with the third wave long and strong and sporting its own five up.  The wave 5 high is a spike and the decline is a clear A-B-C to the Fibonacci 78% support level on a good momentum divergence.

This is the ideal setup for me to forecast a reversal up from the 340 area.  And the rally off that June low has now carried to the 420 area.  That is an increase of about 25% in one month.  Very few have noticed this ‘surprise’ move, but when you see headlines in MSM about the ‘shock’ surge in iron ore, that might spell curtains for the immediate rally potential..

That is why I have been covering this market for the VIP Traders Club.  Not too many others are following it and it does not have the big volumes of some other markets.  But there is enough liquidity there for spread betters.

Here is a closeup of the rally off the June low

The rally has carried to the Fibonacci 62% area on a small momentum divergence – and that is why I believe some profit-taking here is prudent.


Crude oil heads towards my $45 target

For the past few weeks, I have had a downside target at $45 but I may have to amend that:

After the $52 high was made, the market tried to decline but was held up at the Fibonacci 23% support level (yellow zone), which is textbook.  But if the bears get back in control, as seems likely in the near term, my original $45 target may get swept away as the market may sell off to the next Fiv level to the $42 – $43 area.

And if the entire decline becomes an A-B-C, I shall be looking to go long again.

I expect the summer to throw up some terrific trades!


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