Wednesday July 19, 2006 - 10:28:07 GMT
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Black Swan Capital - www.blackswantrading.com
Leading or lagging?
â€śA prudent question is one half of wisdom."
FX Trading â€“ Leading or lagging?
We half-wittedly ask: Does Ben see inflation as a leading or lagging indicator?
â€˘ China has blowout growth for the quarter at +11.3% annualizeâ€¦but falling Foreign Direct Investment (FDI), down 12.2% in June
â€˘ US Industrial Production upâ€¦but inventories rising and retail sales falling
â€˘ Yield curve is inversionâ€¦2-10 year and â€śfrontdoorâ€ť inversion with Federal funds above 10-yearâ€¦â€śOver the prior 55 years, the Federal funds rate has exceeded the ten year note yield only eight times. Six of the inversions were followed by recessions,â€ť according to Hoisington Investment Management Company.
â€˘ Money supply â€śhas declined from a 9% growth rate in December of 2001 to a miniscule 1.1% expansion in the twelve months ending June 2006,â€ť writes Hoisington.
â€˘ Housing is under pressure. We are see prices fall in many formerly hot areas. Spec players are leaving the keys on the doorsteps and walking away in some places.
Has Ben & Co. done enough i.e. 425 basis points in the last two years?
â€śâ€¦this is the largest percentage increase in the funds rate over a two-year span since 1962. So it shouldnâ€™t surprise anybody if the economy started to sputter,â€ť writes Jim Grant.
Maybe we find out something today.
Jack Crooks, Black Swan Capital Black Swan Subscription-based Service
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