Thursday March 16, 2006 - 11:29:42 GMT
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Black Swan Capital - www.blackswantrading.com
Cause and effect ain't that simple...
â€śPeople who look for easy money invariably pay for the privilege of proving conclusively that it cannot be found on this sordid earth.â€ť
The Fedâ€™s Beige Book didnâ€™t seem to sound any alarms portending US economic demise. In fact, US stocks jumped to a fresh multi-year high on the newsâ€¦
The stock guys, it seems, are less concerned about the recent news on the current account deficit than the bank analyst currency crowd; for them, the current account has reared its ugly head again.
It is shaping up as dollar doom and gloom time again say the well-educated bank analyst types. (We have nothing against being well educated or bank analysts, for the recordâ€”well, other thanâ€¦never mind. Anyway, it seems no matter to them the dollar began its accent when they were at fever pitch forecasting the dollar would slip into the abyss back in December â€™04 because of (drum roll please)â€¦â€¦..â€¦the current account deficit).
â€śThe US dollar MUST do down because of the deficit,â€ť the â€śtoo smart by halfâ€ť crowd contends. Well, the dollar may go down; but not necessarily because of â€śthatâ€ť reason.
This idea/notion/belief/broken-clock-theory that we can draw cause and effect from the current account to the dollar continues to baffle us. So we started thinking about why this topic draws so much ink from the bank analyst types. Thus, as we conjectured on cause and effect, we reached the following conclusion: Because the bank analyst crowd doesnâ€™t trade its own money based on its own theories, they can continue to espouse a theory that would drive most real life traders into bankruptcy.
Ahâ€¦we feel better now that we shared our rant this morning. Take care.
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