August marked the fifth consecutive rally since the two down months of February and March, and the party continued today as the market is clearly getting Powell’s “inflation running hot” message, Tony Greer, editor of The Morning Navigator, told Real Vision during today’s Daily Briefing.
Greer said that the Fed’s memo is a pivotal time point in this rally, and it seems to have ignited another leg. Asset holders are benefiting from asset price inflation – and that is exactly what the Fed intended, he said.
We’ve got a weak dollar, a steepening curve, a TIPS rally, and market-based inflation numbers ticking higher, all contributing to a commodities breakout, which Greer said is also the result of the Fed’s mechanism.
“When you keep passing the baton from one sector to the next, to the next, to the next, you get this kind of sustained price action and shock and awe we see on our screens,” he said.
Greer said he expects this rally to last for the next few months. “Markets are responding to the Fed’s direction and between now and the election, and I don’t see what stops it.”
Greer discussed this bullishness on commodities as a dollar play for starters, and added that the reason he’s so bullish commodities is that Powell announced the inflation targeting after commodities already staged an interesting bottom, a consolidation, and a breakout beyond their moving averages.
This tells him the market was telegraphing what was to come, and now we have the opportunity to capitalize on the rest of the rally. He said there’s room to run on commodities; every dollar that’s going to be invested in commodities and commodity stocks this year is not in the markets yet.
For the rest of week, Greer is watching the Bloomberg Commodity Index to look for a follow-through in commodities and signals of headline inflation.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: This is pretty obvious, but we should probably say it anyway so that there is absolutely no confusion… The material in REAL VISION GROUP video programs and publications (collectively referred to as “RV RELEASES”) is provided for informational purposes only and is NOT investment advice. The information in RV RELEASES has been obtained from sources believed to be reliable, but Real Vision and its contributors, distributors and/or publishers, licensors, and their respective employees, contractors, agents, suppliers and vendors(collectively,”Affiliated Parties”) make no representation or warranty as to the accuracy, timeliness or completeness of the content in RV RELEASES. Any data included in RV RELEASES are illustrative only and not for investment purposes. Any opinion or recommendation expressed in RV RELEASES is subject to change without notice. RV Releases do not recommend, explicitly nor implicitly, nor suggest or recommend any investment strategy. Real Vision Group and its Affiliated Parties disclaim all liability for any loss that may arise(whether direct, indirect, consequential, incidental, punitive or otherwise) from any use of the information in RV RELEASES. Real Vision Group and its Affiliated Parties do not have regard to any individual’s, group of individuals’ or entity’s specific investment objectives, financial situation or circumstances. RV Releases do not express any opinion on the future value of any security, currency or other investment instrument. You should seek expert financial and other advice regarding the appropriateness of the material discussed or recommended in RV RELEASES and should note that investment values may fall, you may receive back less than originally invested and past performance is not necessarily reflective of future performance.Well that was pretty intense! We hope you got all of that – now stop reading the small print and go and enjoy Real Vision.