Monday, December 19, 2016

Dollar And Oil Bring Central Bankers Closer To Declare Victory. Then, Watch Out.

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*Global central banks are focused on achieving 2% inflation. Until then they buy bonds and other assorted assets.

*When inflation approaches 2%, what then? Will central bankers have the guts to stick to their plans? They will have to sell bonds. Otherwise, they ignite inflation higher.

*The recent jump in the dollar and oil now will further add to inflation. Central bank selling has now been pulled forward which is a risk to markets.

The ECB, BOJ and The Fed all have around a 2% inflation target. Many of these bankers think that like a car they can upshift and downshift consequence free. We're quickly approaching 2% globally and the dollar (NYSEARCA:UUP) and oil just stepped on the gas. Genius central bankers are about to be tested. Reversing their buying as we approach 2% inflation will help crash markets (NYSEARCA:SPY).
The Dollar: 14 Year Breakout

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