The Brains Trust-2019, page-506

Market reaction to Fed meetings often creates a great deal of confusion and the most recent gathering of this august body appears to be no different. While it does look as though the final opinion has settled on a somewhat benign attitude towards rates and growth, Wall Street lost its initial gains and finished sharply lower. This overnight action across the major indices increases the probability that we are seeing the top of this advance.

The US dollar reacted negatively as rates came off which let the price of gold find a nicely higher level hopefully by a sufficient amount to dismiss any of the negative signs we have had to deal with over recent days. Platinum and palladium added to their gains of yesterday.

However, the main highlight of the day, from Australia's point of view, was the price of iron ore which eased back to its initial support level. In discussion yesterday on this thread, I mentioned that I was concerned that the price of iron ore might have formed a double top at $90 matching the high in early 2017. As well I pointed out that the spread across the futures market looking twelve months out had increased from around six dollars in early January to now be twelve dollar lower which can mean some concern that prices would not be able to maintain current levels. If the iron ore price cannot hold this initial support, I suspect we will see the price ease back by a substantial amount.

The XJO spent another day yesterday locked in the same tight range of recent days. Will likely see a downside break today from the nasty little head and shoulders top pattern that has been slowly built over recent weeks. Of real concern to me is the structure of our interest rate market with the three year rate continuing to fall further and further below the 90 day bill rate. This is not a good sign for the economy and I do not believe sufficient attention is being paid to this very clear economic indicator.