Monday September 12, 2005 - 11:41:12 GMT
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Black Swan Capital - www.blackswantrading.com
Monday 12 September 2005 7:00 AM EST www.blackswantrading.com
•Key reports due today (WSJ):
No major economic indicators are scheduled for today.
“In the realm of ideas, everything depends on enthusiasm; in the real world, all rests on perseverance.”
Are we seeing the budding consensus of last week—the one that says the Fed “must pause” because of the impact of hurricane Katrina—being shaken out of the market?
We don’t think the Fed pauses. And we think there is a very good chance the $ will continue to work its way higher over the weeks ahead.
This is a summary of why:
•Technically, uptrend in tact and $ froth gone – much of the earlier dollar bullishness has been shaken from the market as evidenced by the decline in open interest (red line in the chart below).
Chart: Dollar Index/Open Interest
•US economy positive momentum - $11 trillion economy momentum may be slowed but not stopped—fiscal stimulus should provide a boost
•Speculative froth coming out of crude prices – should pressure come off crude, it tends to free the Fed’s hand a bit
•Fed will raise rates –
oHousing market – can ill afford to juice this bubble more
oNear-term inflation risk - because of supply shocks and fiscal stimulus
Jack Crooks - Black Swan Capital
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