Business

The $USD continues to collapse. As we write this, it has taken out critical support and is well on its way to unwinding ALL of the gains from its 2014 bull market.

As the $USD collapses, it’s going to unleash a TSUNAMI of inflation into the financial system. Already the Fed’s sticky price inflation (the BAD kind) has risen above its target 2%. Indeed, as of its latest reading, sticky price inflation is clocking in over 3%.

This is going to be like rocket fuel for inflation trades. Smart investors will use this trend to make literal fortunes.

We warned two weeks ago that China's "Bronze Swan" was looming as the crackdown on leverage in the system by Chinese authorities may be forcing unwinds of the CCFDs - thus putting upward pressure on Copper futures (unwinding short positions) and selling physical copper (which would mean procuring the physical metal before passing it on). Those effects were exactly what we had been seeing in the market until the end of August.

On Friday the Department of Commerce will report August retail sales, a material report which all else equal, may influence whether the Fed proceeds with its plans to unveil balance sheet tapering in its upcoming FOMC meeting. However, as we discussed last week, the report, together with virtually all other high frequency economic reports, will be materially distorted by the destructive aftermath of hurricane Harvey (Irma's impact will be felt in the September retail report).

Complex systems are all around us.

By one definition, a complex system is any system that features a large number of interacting components (agents, processes, etc.) whose aggregate activity is nonlinear (not derivable from the summations of the activity of individual components) and typically exhibits hierarchical self-organization under selective pressures.

Two of 2017’s major investing themes thus far are the return of Gold (NYSEARCA:GLD) and the prolonged weakness in the U.S. Dollar (CURRENCY:USD).

Year-to-date, Gold is up 15.72% while the U.S. Dollar is down 9.57%.  This follows a multi-year decline in Gold and a multi-year rise in the Dollar.