Wednesday August 26, 2009 - 12:50:13 GMT
Share This Story
Black Swan Capital - www.blackswantrading.com
Global demand questions still...
â€˘ German business confidence rose for a fifth month in August (Bloomberg)
â€˘ Japan's exports fell 36.5 percent in July from a year earlier. (Reuters)
â€˘ South Africaâ€™s inflation rate fell to 6.7 percent in July, the lowest in 23 months. (Bloomberg)
â€˘ German import prices fell by 12.6 percent year-on-year in July. (Reuters)
â€śIt isnâ€™t that they canâ€™t see the solution. It is that they canâ€™t see the problem.â€ť
FX Trading â€“ Global demand questions stillâ€¦
If China is the spark for global demand, why are Japanese exports to China still in the proverbial toilet? If Europe is on the road to recovery, why have Japan exports to the continent been crushed?
In the AP story regarding the dismal export performance for Japan in July, noted above, were these tidbits of information:
â€˘ â€ś[Japanese] Asian-bound shipments fell 29.9 percent [in July], while those to China alone declined 26.5%, the ministry said.â€ť
â€˘ â€śJapanâ€™s exports to the European Union decreased a steeper 45.8 percent.â€ť
These numbers sound bad to us, no matter how you slice them. But the chief economist at Barclayâ€™s Capital is not worried. He said he sees it as â€śan adjustment to the pace of increase.â€ť Hmmmâ€¦ Maybe itâ€™s faith-based economics! This game of forecasting fundamentals seems quite far from a â€śscience.â€ť
We are not the only ones concerned about the old â€śdouble dip.â€ť Reported party animal Professor Roubini is re-thinking his more optimistic forecasts from a couple of weeks ago, and re-forecasting back to his original forecast of growing concern of a double-dip. That is the M/O it seems when you become a media superstar, just keep forecasting and hope they remember the one that was right. It seems to have worked for Mr. Rubini, otherwise why would all those vivacious young investors be hanging with the Prof all the time.
Okay! What is the market telling us? It seems it may be at least hinting at something, if not outright ringing a bellâ€¦and that something may just be that another bout of risk aversionâ€¦
Below are some of the comments and charts we sent our Members yesterday (and Sunday)â€¦we are positioned accordingly should markets turn:
The commodity currencies (NZ$ exception) failed to make new highs in line with stocks and oil, as they have in the past (refer to the key levels issue we sent on Sunday). In fact, crude was down around $2.45 today and the stock market has been unable to hold its gains and weakening into the close and commodity currencies reversed strong early gains.
SPU Daily: A perfect Japanese doji candlestick yesterday. Something to note as often the near-term move following a doji has legs; today stocks again failed to hold the highâ€¦ [Chart not available in text format.]
10-year Note Futures Daily: Bonds also reversed to trade higher yesterday and followed today (this in the face of the massive US deficit announcement). Higher bond prices have been correlated with weaker stocks and a stronger dollar lately. [Chart not available in text format.]
Obviously we have found some charts to fit the story here. Granted! The point could be made this is simply a near-term correction setup and nothing more. True that! But if the market view morphs from complacency about recovery being on track to one of a double-dip mentality (we are not sure we emerged from the single dip) on the evidence global demand has not yet rebounded, al la powerhouse exporter Japan numbers, then a minor correction may lead to a lot more.
Itâ€™s not necessarily our forecast, unless of course it comes true. But it is to at least make the case there is a whole bunch of real risk still out there in the real world the VIX and many others are looking right pastâ€¦ [Chart not available in text format.]
Black Swan Capital LLC
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."