Credit Bubble Bulletin/Doug Noland/6-11-2022
“Things weren’t supposed to unfold this way. The Fed was clearly going to be cautious, all moves made gingerly and well telegraphed to conspicuously vulnerable markets. Given time, inflation would surely subside. The worst-case scenario would be the Federal Reserve and global central banks raising rates until something began to ‘Break.’ There was time. Rates would remain extraordinarily low for months and even quarters. Nothing too pressing. Well, complacent markets – and central bankers – grossly misjudged two key aspects of underlying fundamentals. Inflation Dynamics were much more powerful and well-entrenched than appreciated. Similarly, Market Structure fragilities were greatly more acute than recognized. The upshot: things are ‘Breaking’ before central bank tightening cycles even get cracking.”
USAGOLD note: Noland says he saw something different in gold trading last Friday – “While the precious metals of late have been caught up in de-risking/deleveraging and speculator liquidations. Friday trading provided an inkling of how a crisis of confidence in financial assets – and finance more generally – could spur safe-haven buying in stores of value tested over centuries.” Following Friday’s inflation reading, gold initially dropped to $1825 then rallied to close at $1874 – a nearly $50 intraday swing.
