The USD has finally found some resistance, back down -0.16% this morning, while risk assets roll-up. 

Metals: Copper +0.60%, Platinum joining in +1.41%, Gold and Silver +0.92% and +1.99% respectively. Copper specifically looks to be on a solid path to 3.30 as US inflation (and Chinese growth) continues to accelerate.

10yr yields back -10bps day/day. We’ve removed Bonds from our basket of long ideas, and will likely make its way onto the “Sell” list.  Inflation will (and already is) be accounted for and expressed via rising rates at the long end of the curve. Don’t be surprised to see a “Sell 10yr Notes” trade pop up in your email soon. 

Oil- pulling back, be ready here. We still may take a peak under 40 – but I may not wait. Sometimes its OK to be early, so long as you have the trend in your corner. We’re not going to “nail” every top and bottom, that’s just not realistic. We’ll keep our positions small, and trade with the overall trend, which moved to bullish again earlier this week.

Producer Price Index PPI accelerated y/y from 0.4 to 0.5 – Inflation accelerating

If you haven’t already learned by now, the economy is NOT the market and visa versa. Unfortunately for most of this country, they don’t have the wherewithal to purchase risk assets (or short the USD) that help them offset the burden of rising inflation costs. For most of America, they punch their time clock in the morning, and punch out at the end of the day.  And while it’s nice to get a stimulus check in the mail or extra unemployment benefits every week, don’t for a second think that that doesn’t come with a price. Inflation. This has been ongoing since June, following the crash in March, and this is likely to persist through the first half of next year according to our forecast.

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John Caruso

Senior Market Strategist
Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.
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