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The Dollar Index last week popped through peaks going back as far as five years, flouting the Fed's doomed efforts to 'manage our expectations'. This is deflation knocking loudly on the door, and as the dollar continues higher it will put increasing pressure on all who owe. (See my commentary above, and click here for a lively, expansive interview at Howe Street.)  In the headline essay, I've used a minor, look-to-the-left peak near 109 to project minimum upside for the next few weeks. However, here's a bigger picture that yields a higher target at 112.14. I expect the dollar eventually to challenge highs near 120 recorded twenty years ago. _______ UPDATE (May 13, 9:57 p.m.): To gauge the strength of the uptrend, here's a lesser chart that shows DXY in an apparent bullish consolidation after hitting a relatively minor rally target. The 112.14 target given above remains viable and is still likely to be reached. _______ UPDATE (May 19, 6:13 p.m.): What a difference a day makes. The sharp dive has transformed a promising technical picture into a question mark. Some will see a head-and-shoulders in the making, but we should give it another day or two before be infer that DXY is about to fall back to 100 in search of support.

A lone deflationist on the lunatic fringe of economics 30 years ago, I wrote in Barron's and the San Francisco Sunday Examiner that an out-of-control dollar eventually would do us in. Specifically, I asserted that a short squeeze on dollars would send their value soaring, making it difficult or impossible for anyone who owed dollars to repay them. I'd already run this idea past a few Ivy finance professors, who all had the same reaction: "What have you been smoking??"  Not Professors Ivor Pearce and W.P. Hogan, however. It was their 1984 book, The Incredible Eurodollar, that had awakened me to the potential disaster brewing in a dollar market vastly larger than all of the others put together, including stocks and Treasury paper. Could a tradeable asset available in theoretically unlimited quantities from the central bank ever be in dangerously short supply? "An interesting question," Prof. Pearce allowed in a phone conversation we had at that time. The possibility had fascinated me since my days as a floor trader on the Pacific Stock Exchange. It was not uncommon to see a stock soar simply because too many traders had bet against it. These panic-driven melt-ups blithely ignored poor 'fundamentals' to generate rallies that tended to enrich the reckless and stupid at the expense of the well-informed. The latter invariably suffered pain an even financial ruin, although many of them were very smart guys who could do the math. In one particularly memorable instance, they calculated that a certain airline stock trading for around $80 was not worth half that. After the stock ultimately climbed above $200, standing quants on their heads and wrecking some financially promising young lives, the quaintly stupid notion of 'valuations' would never be the same for them. Or for me. Short Up the Old Wazoo This

We've been using a big-picture rally target at 103.25, but let's start the week with a focus on a more conservative target at 101.97 that looks all but certain to be achieved.  Its main importance lies in its ability to tell us whether the steep uptrend might be losing steam. As always, an easy move through a Hidden Pivot resistance would portend more strength to come. The dollar's rise matters a great deal because it raises the price of oil for most of the world outside the U.S., and because it increases the burden of debt for all who have borrowed dollars. _______ UPDATE (Apr 27, 11:18 p.m.): The dollar has very precisely hit an important target at 103.25 that took four years to achieve, so extra caution is warranted. We'll move to the sidelines for now.

If you're a permabear, it might be refreshing to view Friday's thousand-point Dow avalanche as the start of a wholesome new trend. My gut feeling, however, is that the plunge will reverse before midweek, ideally at Hidden Pivot targets featured in the latest list of 'touts' on the Rick's Picks home page. I'll keep an open mind about this if the targets get smashed, but I'm not convinced the stock market has begun the punitive reset it has needed so badly for years. Arguably more interesting and consequential is the steep ascent of yields on the 10-Year Note to within inches of a 3.24% target that I've been drum-rolling for months. What will happen when we get there?  My gut feeling is that rates will level off for at least a few months, then head lower for a long, long time as the U.S. and global economies slide into a deflationary bog. Lower rates unfortunately will bring no relief for debtors, however, since the value of assets that they've hocked up to their eyeballs as collateral will be falling as well. Snuffing Inflation From a technical standpoint, the 3.24% target looks too clear and compelling not to halt the rise in long-term rates at least temporarily. From a fundamental standpoint, the reason I doubt the rally will blow past 3.24% is that at that level the total burden of all debts will be sufficient to snuff inflation of every sort, turning the real estate bubble, for one, into a black hole of deflation. This will happen irrespective of what the wizards at the central bank intend or expect. Some are saying the Fed wants the stock market lower. Although that sounds plausible, we shouldn't trust that they know how to do this without collapsing an already shaky global economy. The

The hellish collapse of the last two weeks has brought TLT within easy distance of a 116.06 target that has been in play since January. Given the size of the Treasury bond market, a fall of this magnitude will hold very significant implications for the global banking system. It is also a thumb in the eye for the charlatans who run the central bank, since market action has pre-empted the Fed's need to tighten much of anything. Given the clarity of the pattern, it seems extremely unlikely the downtrend will significantly overshoot D=116.06. That means skyrocketing yields on the long bond are about to level off or possibly reverse. _______ UPDATE (May 5, 10:26 a.m.): TLT has breached the 116.06 pivot and traded as low as 115.36 this morning, but I doubt this can go much farther without a substantial bounce. Without divulging proprietary details, a 'reverse-pattern' buy would trigger with a bounce of 1.33 points from any low between the so-far low at 115.36 and no lower than 114.80. (That implies a trigger currently and tentatively at 116.70). The initial target for profit-taking would be 1.33 points above the entry price. I am still forecasting an important top in the 10-Year Note, currently trading near 3.04%, at 3.24%. ______ UPDATE (May 5, 9:35 p.m.): In the chat room this afternoon, I suggested using the 113.21 downside target of a lesser pattern now that the granite pivot at 116.06 has been pulverized. It would take a print at 119.32, however, to suggest a serious turn is under way.

The rally has tacked on $15 a barrel since a Hidden Pivot support at at 93.07 nailed the bottom within 14 cents a week ago. Now, judging from the way in which buyers obliterated the 104.91 midpoint resistance last Thursday, the move is all but certain to achieve the 116.89 target of the reverse pattern shown in the inset. If it gets past that Hidden Pivot with ease, we'll be looking at more upside to as high as 130.00 by the end of April or early May.  ______ UPDATE (Apr 20, 1:07 a.m.): A fall to x=98.92 would trigger a 'mechanical' buy with entry risk per contract of $6000 per contract, assuming  stop-loss at 92.92. _______ UPDATE (Apr 21, 11:38 p.m.): The mechanical buy triggered at 102.30, basis the June contract, and a subsequent rally to 104.32 could have been used to exit with a decent partial profit. If anyone is still on board, please let me know in the chat room so that I can determine whether to establish a tracking position.

This chart restores the original 3.24% target for yields on the 30-Year Bond. It was rickismed down to 3.22% for a short while due to the usual misdrawn coordinate. Notice that last week's peak came in a crucial spot, a zillionth of an inch below the pattern's secondary resistance at 2.85%.  I doubt we'll see much of a stall here, meaning 3.24% is coming soon, Given the clarity of the pattern, however, a top of at least intermediate degree seems extremely likely, so look for a leveling off or reversal in the ensuing weeks. If, heaven help us, rates simply blow past D, that would have enormously significant implications for a global asset boom that was going to end sooner or later anyway.

For many of us, as pleasurable as it might be to picture Twitter in the hands of Elon Musk, and to imagine a despairing Jack Dorsey committing seppuku, Musk should save his billions for more useful purposes. He could start by building a competitive platform for a hundredth of what he's offered to pay for Twitter. He could also buy an existing platform such as the up-and-coming TruthSocial for a relative pittance. What is Twitter's value, after all? The company has been losing steady money offering a place for 'progressive' extremists to set up sniper positions online. But would allowing the rest of us to post there improve the bottom line? There are reason to doubt this, for in fact the resulting free-for-all could wind up driving subscribers and advertisers away. Musk says he simply wants to promote free speech. While it is true that nearly any conceivable change in Twitter's content would bring improvement, one suspects that his main goal is to punish the platform's narrow-minded managers for being the crypto-Stalinist apparatchiks they are. That being the case, and assuming Musk's offer is successful, we should look for him to relocate Twitter from San Francisco to a red-state stronghold. Enid in Oklahoma comes to mind. Or perhaps Bristol, Tennessee. Or Bullhead City, Arizona. Woke-ism Under Attack Regardless of whether the deal flies -- and there are good reasons to doubt that it will -- Musk has provoked a healthy discussion of the impact on America of Twitter's heavy-handed censorship. Woke-ism is on the run, under attack lately not just from political conservatives, but from centrists and others who have tired of living under wacky rules designed to benefit the few at the expense of the many. Most of us would be content to live and let live. November's mid-term

For more than a year, I've recommended what my friend Doug Behnfield calls the 'barbell strategy' to secure one's nest egg against the deflationary hard times that lie ahead.  As formulated by Doug, a wealth-management advisor based in Boulder, the barbell portfolio is constructed with gold and bonds as offsets. Try to imagine the worst of times and you may have difficulty concocting a scenario in which T-Bonds and munis on one hand, and gold on the other, would fall together. However, it is relatively easy to imagine circumstances in which either or even both sides of the hedge would rise in times of extreme economic adversity. I had suggested holding off on the T-Bond portion of the hedge until interest rates peak. That day is coming, probably sooner than most 'experts' think, but we are not quite there yet. Yields on the Ten-Year Note ended last week at 2.71%, but my forecast calls for a top, or at least a lengthy leveling off, at exactly 3.24%. This is somewhat higher than the 3.02% rate I'd projected  for the 30-Year T-Bond, the difference lying in the way their respective rallies have unfolded. For purposes of optimizing the barbell hedge, however, I'd suggest using the 3.24% rate indicated in the chart above. No More Volckers A top at that level would be a far cry from the 20% peak in June 1981 that followed two years of tightening by Paul Volcker. As a result, inflation remained subdued for more than 30 years. The effects of tightening this time around could not conceivably turn out to be as benign as before because the debt sums affected are exponentially larger. To cite one particularly menacing example, Third World debts amounted to perhaps $1.5 trillion in the mid-1980s. This sum was deemed sufficient to