Volume: 5 Issue: 125 www.tgmacro.

com June 18, 2021

Dr. Jerome Chronicles

Fedspeak: Benchmark rate on hold, two potential rate hikes by 2023, economy
growing at a healthy rate, FOMC language to keep evolving, $120B/month bond-
buying pace to continue, the policy will stay accommodative when lift-off comes. All
of that was boilerplate Fed stuff. The process of verbally and visually taming the
inflation trade left a much deeper mark than the rhetoric. If one thing was evident in
the Powell presser Wednesday afternoon – he’s HAD IT with push back on transitory.
*points at screens* See. He fixed it. The inflation is nearly gone from your screens.

Powell acknowledged that demand is strong and incomes are high at the moment. He knows how the
‘bottlenecks’ we’ve seen, which refers to cyberattacks on our meat processing plant and pipeline along with the
boneheaded blockage of the Suez, can affect supply. The Federal Reserve does NOT dismiss the chance that
higher prices go on for longer – but Powell expects it to all go away. Watch this.

*Dollar index finds an “S” on its chest and soars through major moving averages in a single bound*
*U.S. yield curves collapse*
*Breakevens nosedive*
*Gold plunges $100 in a straight line*
*Copper falls $500 on the LME*

Powell reminded us that global factors weighing on inflation are still out there. He’s referring to our $28T debt
load and the deflationary forces of technology. He expects supply increases to appear in months to come. He
expects inflation to ‘move down,’ and he thinks the Fed's inflation expectations are ‘well anchored’ and in a
‘good place.’

*Gold plunges another $50*

*Gold bugs spit blood*
*Breakevens settle positive to make them look bad*

He threw some taper talk at us to show bond bears he means business. Tapering will be orderly, systematic,
and transparent – just like a colonoscopy – then he got defensive. He said the Fed is NOT behind the curve.
There is nothing wrong with the new Fed framework, and he feels ‘people are misinterpreting it.’ I found the
message very easy to interpret as I witnessed every market-based inflation signal get euthanized on demand.
As you can see – I’m taking it very seriously by dramatically reducing exposure as trailing stops ticked off one
by one.

“Stop-out city,” one client rightfully typed over. Not really. It was actually “take profit city.”

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 Volume: 5 Issue: 125 www.tgmacro.com June 18, 2021

So What? So Let’s Dance!! – The View Matrix was rockin’ and rollin’ yesterday.
We traded out of 6 positions leaving only 5, and then we added one when I
decided to buy Trulieve at its 200dma. One rule of thumb is that you should be
trading more, not less, if the VIX is sticking its chest out beyond weekly ranges.

We took two 5% losses selling XHB and buying back ARKK. I can live with the
ARKK cover. Momentum could have taken her apart, but as it turns out, her
fugazi methods are getting a rescue package from the Federal Reserve right now.
XHB was our 4th attempt from the long side after 3 big winning trades. Punting it
for a 5% loss is part of the survival process.

We took a 9% nose breaker in GDX. That one hurt, and I won’t soon forget it. You won’t see a trading position
in gold until this dynamic ends one day. As long as gold is the central banker’s reading on inflation – they are
going to continue to snuff out gold rallies and tell you it was ‘transitory’ while your grocery bill and gas bill
grow to the sky. That’s not a dynamic I’m in the position to fight or fade.

We paid a few lunch bills with X and LMT profits of 5% in total, and we knocked XME out of the park when we
sold our industrial metals & miners at $43 yesterday. That was a 30% trade from the $33 entry. Take it and
run.

Net – we TOOK PROFIT yesterday if all entry-level position sizes were equal. That’s the beauty of having a
somewhat balanced book. That’s the beauty of turning your book over into new opportunities. That’s the
beauty of going home for the weekend with only 6 positions on the pad tonight. Maybe fewer by the time Dr.
Jerome gets done with it.

That’s how you sleep like a baby at night with your head resting on a pillow of profits. It’s not as fluffy as it was
2 weeks ago – but it's just enough, and we will wake up to fight another day.

What’s Goin’ On? - There’s a lot of information to unpack, but the inflation trade
has been put to sleep.

The dollar just saw back-to-back 3-sigma rallies, which relocated it from 90.50 to
92, then we woke up to St. Louis Fed President Jim Bullard saying he thinks rate
hikes start in late 2022 and DO NOT WORRY - they will give markets time to react
to the tapering move. The dollar is bid a new high for the move. Stocks are
hemorrhaging below yesterday’s low.

The tone I hear is GET OUT OF THE WAY, and that is what we’ve done. Gold suffered 3-sigma damage, and I
got bucked off of my ‘gold miner breakout trade’ in the process. By the time the dust settled, GDX closed,
dangling below all major moving averages, and I’m happy to be out this morning.

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 Volume: 5 Issue: 125 www.tgmacro.com June 18, 2021

If gold is an object of central bank ire, and they are happy to contribute to its demise to preserve their
reputation, then why stand in the way of it going forward? It makes no sense, no matter how much sense it will
always make to own physical gold. That’s why PHYS stands, ‘like a rock,’ on the bottom of the View Matrix.
Gold is back to being our insurance policy against currency devaluation. Not a trade.

Yes, silver landed on its 200dma at $26.25. That selloff drove a stake through the heart of the gold bull but
look at how centralized the damage was to precious metal. Sure, platinum got dunked below its 200dma. No
other commodities suffered damage as severe.

Copper fell 3% and landed on the 100dma. Aluminum fell 3% it barely left a stain on the trajectory. Nickel fell
3% into moving average support. Zinc fell a full 4% into moving average support, within the context of a 15%
rally since November. Meanwhile, iron ore is immobile saying, “cute selloff, girls.”

Iron ore hasn’t budged since China started saber-rattling about capping commodity prices. Like Andy Home
says in this article, we’re going to ‘learn to live’ with talk of Chinese state metal sales. The last time China sold
metal reserves was in 2010 when markets were still rebounding from the Great Financial Crisis. This time
around, Andy reminds us that talking about sales is very different from making actual sales.

State reserves are just one component of a multi-pronged attempt to cool commodity price inflation before it
feeds into a more significant economic headache. The proposed sales should be taken within the context of
repeated government warnings about "speculation,” "hoarding," and "price manipulation" as Beijing tries to
slow a commodities bull wave created by its pandemic stimulus.”

There’s a good deal of skepticism about how much copper is going to be released. My point is, China’s tough
talk on commodities will force a few weak longs to liquidate, but it won’t likely change the current dynamic,
which shows copper in high demand.

In the energy patch, WTI crude oil was flat on the day after hovering above $72 for most of the session. Those
losses culminated in a 1% slide to gasoline’s 50dma for the 4th time this year. She’s sliding toward $70 in the
de-risking this morning, and gasoline is putting together a streak of 5 negative performances. With energy
fundamentals intact – I think the complex can hold in.

I’m going to focus a lot more on the energy and grains side of the inflation trade within the context of this
pullback. The Fed can taper bond purchases, impose yield curve control, and blatantly intervene in the F.X.
market. Dr. Jerome can defile gold and set the trend back on its heels.

Central banks can’t sell corn or gasoline. While our recovery from Lockdowns is in motion, I’ll remind you the
line for those commodities is still out the door.

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Volume: 5 Issue: 125 www.tgmacro.com June 18, 2021

Watch the dollar and breakevens for signs to get back

into inflationary natural resource trades.

Position to add length in energy and ags.

Scrape gold off the pavement and take it off the radar
screen.

That’s how we’re going to continue to make money in

2021.

“It’s an easy game.” – Guy Adami circa 1996

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 Volume: 5 Issue: 125 www.tgmacro.com June 18, 2021

“I don't write songs, songs write me. ... Writing a song can be agony or ecstasy. It can take half an hour or half a
year. The popular song is America's greatest ambassador.” - Sammy Cahn, born July 18, 1913

“Even more importantly, it's wine, food and the arts. Incorporating those
three enhances the quality of life.” - Robert Mondavi, born July 18, 1913

“But have you wine and music still, and statues and a bright-eyed love, and foolish thoughts of good and ill,
and prayers to them who sit above?” - James Elroy Flecker

“Do something for the joy of doing it and pray you won’t be punished.” – Sammy Cahn

“I've always wanted to improve on the idea of living well, in moderation, wine is good for you - mentally,
physically, and spiritually.” – Robert Mondavi

“The popular song is America’s greatest

ambassador.” – Sammy Cahn

“I want to make wines that harmonize with food - wines that almost
hug your tongue with gentleness.” - Robert Mondavi

“Music is the wine that fills the cup of silence.” – Robert Fripp

“Music is one of those things that is constantly

going on in my head all the time. It’s sort of like
the evolution, and creation of doing food, or my
philosophy about wine. It’s always beating in
my head so it keeps the spirit moving.”
- Emeril Lagasse and me

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 Volume: 5 Issue: 125 www.tgmacro.com June 18, 2021

View Matrix
Sleep like a baby with DBA, USO, XOM, physical gold, and a profitable solar short on the books.
Even if they stop us out of TAN on the upside – it’s a 30% winner.
The power of the trailing stop-loss.

Off to Never Never land…

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 Volume: 5 Issue: 125 www.tgmacro.com June 18, 2021

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