I turned on CNBC for the first time in months yesterday to catch the new show they have on. It was the “Ben & Softball Reporters”. To say I was sadly disappointed would be an understatement. The show was a gentleman’s society ball, with no signs of an actual “Press Conference” to it. To say it was scripted would be to ignore the teleprompters that were in use the whole time.
So what did we learn? Well, Ben thinks that things were scary last fall, and we don’t know how lucky we are that he hit the printing button to buy up US Treasuries. I wish someone had asked him if it had anything to do with the fact that according to the US Treasury TIC data, China Mainland has been a net seller of US Treasury exposure since October?
The show was devoid of anything of anything that could be considered new news. In my opinion it served no other purpose other than a glimpse into the mindset of Ben. The whole process was designed to let him talk with out having to field as-sine questions from the electorate representatives of ours.
The irony, was that as the traders realized that Ben had no interest in showing any sign of hawkish tendency’s, the US Dollar started to bleed again. Silver and Gold both broke out during the speak, risking pretty much non stop as long as Ben jawboned the dollar lower.
I was watching the PM’s rise, when I realized this speech was not for us. It was given to a completely different audience. To the Chinese government, which as been a net seller of US Treasuries. Who has said they will start to unwind their over sized holdings in the US dollar.
It was a different speech, when I put it into their context. The affects of inflation are not happening in the US. The Wiemar affects are passing through to China. The expectations of inflation are growing in China, you only have to watch $FXI and the $DXY to see how this dance is going.
The US is exporting inflation to China, to counter their Exporting of deflation to us. It appears that Ben isn’t going to blink any time soon. The ball is now in China’s Court. The flock of Doves are not going to change their flight path. That was what was most obvious yesterday.