Friday December 4, 2009 - 17:23:24 GMT
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Black Swan Capital - www.blackswantrading.com
If you missed JRâ€™s Quotable yesterday, and didnâ€™t follow the story, I suggest you do. Johann Hari, The Independent, penned a powerful piece on Dubai yesterday. It is a slave labor camp designed to appear as an Adult Disneyworld, as he puts it. Anyone who doesnâ€™t think this will end badly is kidding themselves.
â€śBut if thought corrupts language, language can also corrupt thought. A bad usage can spread by tradition and imitation even among people who should and do know better.â€ť
FX Trading â€“ Surprise!
â€śHouston this morning broke a record with the earliest snowfall ever recorded in the city's history,â€ť the Houston Chronicle reported. Sure is good timing for the â€śglobal warmingâ€ť nut-jobs who have made Orwell proud by changing the name of their movement to â€śclimate change.â€ť Now â€śclimate changeâ€ť kooks everywhere can tell us â€śI told you soâ€ť every time we see new records during the global cooling phase we are likely now entering. You just gotta love poly-science; it is so useful when molding a ridiculous world view so that lemmings everywhere can unite. You know who you are!
But there was another surprise today; it came from a most unlikely place called the US economy. US non-farm payrolls were down only 11,000 compared to an expectation of 130,000â€”that was a huge surprise? What was interesting is that we finally are seeing a day when after a question is asked, the answer isnâ€™t, â€śOh thatâ€™s easy, sell the dollar.â€ť
Mr. Market did his thing again dishing out asset class surprises on the news. Todayâ€™s action and our brief comments to suggest this could be sustainedâ€¦
Gold crushed â€“ If scenario #3 emerges, our least likely but one we have expounding upon, which represents a US growth surprise, gold goes to $700 before it sees $2,000.
Euro slammed â€“ Given the mess the Eurozone still has in front of them, they would love to see the euro fall against the dollar so Germany might be more willing to continue to subsidize Athens.
Yen mashed â€“ The US growth scenario means the Fed will raise rates at some point before the Bank of Japan does; thus the yen moves back into its rightful role of key global carry trade currency.
Bonds battered â€“ Yields look very low in a US growth surprise scenarioâ€”adjustment time.
Stocks stung? â€“ Thinking about the idea that as the real economy recovers the stock market gets whacked. The logic is money flowing from the financial economy back into the real one. Sweet justice for sugar high Wall Street â€śfree-marketâ€ť types who never met government subsidized money they didnâ€™t like.
Maybe this is just another one-day wonder. We can never underestimate the ability of the dollar to disappoint. But, if the â€śclimate changeâ€ť crowd can hang their hats on such flimsy and biased research, so can we.
Have a great weekend.
Black Swan Capital LLC
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