Friday September 9, 2005 - 11:12:10 GMT
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Black Swan Capital - www.blackswantrading.com
The Dither Trap!
•France's industrial production fell by the most in 11 months in July. (Bloomberg)
•Global oil consumption will average 83.48 million barrels a day this year, 0.3 percent less than forecast a month ago, the IEA said. (Bloomberg)
•After nearly a decade of consistent declines, lending by Japanese banks, excluding special factors, rose 0.2% in August, the Bank of Japan said. (WSJ)
•Key reports due today (WSJ):
8:30a.m. August Import Prices. Consensus: +1.4%. Previous: +1.1%.
“Dislocations from the storm appear to be important but difficult to gauge, their duration is so far impossible to assess, and the timing and magnitude of recovery is hazy. But in our view, the resilience of the US economy might mean the recovery comes sooner than expected. And past supply shocks have often pushed up inflation expectations and inflation itself. Now that few expect it, a pickup in inflation could be the biggest surprise of all.”
Richard Berner & David Greenlaw, Morgan Stanley, The Perfect Storm, 6 Sep ‘05
Dithering! That’s what it is. I remember once John Percival, editor of the Currency Bulletin, and all-around currency guru, said we need to avoid the dither trap! Currency markets will dither at times. Currency traders by their nature, not being the patient type, tend to get chopped up in dithering markets. In the current vernacular—been there, done that.
What will be the catalyst for a breakout—one way or another? Some potentialities:
1)A crystallization that the Fed won’t pause
2)A realization that US government largesse for hurricane Katrina is yet another hit to its overall dismal fiscal situation
3)Falling crude oil prices
4)Rising crude oil prices
5)An inflation surprise
6)Evidence Europe’s economy will suffer as much or more than the US from Katrina
7)Growing evidence that social/political discontent in China could threaten growth
8)A hit to the muni-bond market, leading to a derivative “accident”
“If one puts an infinite number of monkeys in front of (strongly built) typewriters, and lets them clap away, there is a certainty that one of them would come out with an exact version of the Iliad,” writes Nassim Taleb, in Fooled by Randomness.
Anyone have an urge for a banana besides us?
Jack Crooks - Black Swan Capital
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