​As I’ve said before, what gets little attention in this “lack of inflation” confoundment, is the impact of the internet. With the internet has come transparency, low barriers-to-entry into businesses (and therefore increased competition), and reduced overhead. And with that, I’ve always thought the Internet to be massively deflationary. When you can stand in a store and make a salesman compete on best price anywhere in the country–if not world–prices go down.

And this Internet 2.0 phase has been all about attacking industries that have been built upon overcharging and underdelivering to consumers. The power is shifting to the consumer and it’s resulting in cheaper stuff and cheaper services.  And we’re just in the early stages of the proliferation of consumer to consumer (C2C) business — where neighbors are selling products and services to other neighbors, swapping or just giving things away.  It all extracts demand from the mainstream business and forces them to compete on price and improve service.  So we get lower inflation.  But maybe the most misunderstood piece is how it all impacts GDP.  Is it all being accounted for, or is it possible that we’re in a world with better growth than the numbers would suggest, yet accompanied by very low inflation?

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still looks intact.  As I said on Wednesday, this looks like a technical correction in stocks (even considering today’s bounce), not a fundamental crisis-driven sell-off.

​With that in mind, let’s take a look at the charts on key markets as we head into the weekend.

Here’s a look at the S&P 500 chart….

For technicians, this is a classic “break-comeback” … where the previous trendline support becomes resistance.  That means today’s highs were a great spot to sell against, as it bumped up against this trendline.

Very much like the chart above, the dollar had a big trend break on Wednesday, and then aggressively reversed Thursday, only to follow through on the trend break to end the week, closing on the lows.

​On that note, the biggest contributor to the weakness in the dollar index, is the strength in the euro (next chart).

The euro had everything including the kitchen sink thrown at it and it still could muster a run toward parity.  If it can’t go lower with an onslaught of events that kept threatening the existence of the euro, then any sign of that clearing, it will go higher.  With the French elections past, and optimism that U.S. growth initiatives will spur global growth (namely recovery in Europe), then the European Central Bank’s next move will likely be toward exit of QE and extraordinary monetary policies, not going deeper. With that, the euro looks like it can go much higher. That means a lower dollar. And it means, European stocks look like, maybe, the best buy in global stocks.

​A lower dollar should be good for gold.  As I’ve said, if Trump policies come to fruition, inflation could get a pop.  And that’s bullish for gold.  If Trump policies don’t come to fruition, the U.S. and global growth looks grim, as does the post-financial crisis recovery in general. That’s bullish for gold.

This big trendline in gold continues to look like a break is coming and higher gold prices are coming.

​With all of the above, the most important chart of the week is probably this one …