Friday July 28, 2006 - 10:20:51 GMT
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Black Swan Capital - www.blackswantrading.com
Comdol and credit...
"If we believe absurdities, we will commit atrocities."
The Aussie dollar is considered a Comdol i.e. commodity dollar.
Thus, a chain of logic (twisted and spurious though it may be);
â€¢ Commodities help support the Aussie
â€¢ Commodities are supported by real demand and/or supply constraints
â€¢ Commodities are supported by speculative demand by punters and funds
â€¢ Commodities are supported by liquidity available to fund speculative demand
â€¢ Liquidity is supported by easy credit
â€¢ Central banks, through the magic of the funds rate, price credit
â€¢ Cost of credit is rising
â€¢ The largest final source of demand for commodities is the US consumer
â€¢ The US consumerâ€™s credit costs are rising
â€¢ The US consumerâ€™s collateral value (his home) is falling
Is it the same dynamic of credit? Are Bernanke and friends willing to drive the stake deeper into the heart of the US consumerâ€™s largest and most useful pool of collateralâ€”his home?
Advance GDP and second quarter ECI on tap at 8:30 a.m. ESTâ€”we might get a brief glimpse of what the market expects.
Jack Crooks, Black Swan Capital Black Swan Subscription-based Service
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