Expectations for a David Rosenberg surprise scenario playing out at the conclusion of the FOMC meeting shattered into a heap of broken crystal balls, yesterday. Every asset class not nailed down, save long-term Treasuries, were piled high in the demolition, too.
Not only did the Fed tell the markets more bags of tokens in the Max Keiser ‘Casino Gulag’ economy won’t be handed out after all, the 12-member cabal of interest-rate-price-fixers handicapped the U.S. economy to a downgrade of a less than show—and by the pancaking nature on the yield curve envisioned by the Fed through ‘Operation Twist,’ financials are looking worse than ever today, too. Will CNBC have Dick Bove back on to defend BofA again? He’s got a lotta splainin’ to do.
And, as if in a coordinated attack to assure another September event, Warren Buffett’s Moody’s downgraded Warren Buffett’s BofA (NYSE: BAC) and Wells Fargo (NYSE: WFC). Surely, someone on zerohedge.com will take on the task of explaining that one to the fans.
Moving on to gold.
Those expecting a shock and awe from Bernanke and the Feds, well, certainly got it yesterday, which brings up Marc Faber’s loose call for the gold price to retreat in the coming weeks. As improbably as it may have appeared on Tuesday, Faber could turn out to be right this time on the short-term direction for the precious metal.
If you’ve been keeping track of the divergent calls for the future gold price for the months of September and October between Goldmoney’s James Turk and Gloom Boom Doom Report’s Marc Faber, Faber had been looking for a pullback in the yellow metal to the $1,500-$1,600 range (approximately the 12-month moving average) before considering making a buy recommendation. On the other hand, Turk sees an assault on the $2,000 mark by the end of October amid the crisis in Europe signaling an imminent major event of announcement out of the Troika about Greece—or worse, from the bond vigilantes in the Italian, Spanish and Belgium markets.
Though Halloween is still far off, in overnight trading in Europe, gold and silver have cratered to $1,736 and $37.29, respectively—as of 13:23 London time. So it appears that out of the gates, Faber has taken the lead here. But given the explosive moves these metals can muster, at anytime, Turk could still ultimately win again on his contrarian call in the face the headwinds of October’s bad seasonals to match gold’s ‘extremely overbought’ technicals.
But for those ready to throw in the towel for Turk, he, too, has shocked the fans with his seemingly call for an implausible huge rally in gold during the seasonally low summer months. He turned out to be on the money.
Following the demolition work ordered through the Eccles Building in Washington, yesterday, Turk refused to back off on his prediction for gold $2,000, and told King World News, “While we may move sideways [ in the gold price] for a few more days until everybody reads the writing on the wall, I think we should be preparing for much higher prices. So I am sticking to my $2,000 target before the end of October.”