Friday August 4, 2006 - 10:06:29 GMT
Share This Story
Black Swan Capital - www.blackswantrading.com
Rambling on jobs Friday
â€˘ Federal Reserve officials see the recent rise in underlying inflation as mostly a temporary response to rising energy prices, not an overheating economy. (WSJ)
â€˘ Key Reports (WSJ):
8:30a.m. July Non-Farm Payrolls. Consensus: +150K. Previous: +121K.
8:30a.m. July Unemployment Rate. Consensus: 4.6%. Previous: 4.6%.
â€śDoublethink means the power of holding two contradictory beliefs in one's mind simultaneously, and accepting both of them.â€ť
FX Trading â€“ Rambling on jobs Friday
Bond prices donâ€™t seem to be reflecting the same inflation concern of many leading financial commentators. It seems bond traders believe the Fed has done enough; the Federal Funds rate is higher than the 10-year Note Yield as you can see in the chart below:
Source: The Wall Street Journal
The short-end of the yield curve continues to become more â€śinverted.â€ť Does it signal a big slowdown ahead in the US? Debate rages on the meaning of the yield curve in â€śmodernâ€ť times. One of the arguments (and we believe a good one) is that both businesses and consumers can now generate liquidity from many different sources in a global environment with a plethora of real and pseudo financial intermediaries ready, willing, and able to extend credit. The problem with this line of reasoning is that it sounds awfully like the ubiquitous and dreaded phrase that has cost more investors more trillions any other we can think of, â€śItâ€™s different this time.â€ť
Itâ€™s different this time so the Mâ€™s of money supply no longer matter many surmiseâ€¦
Chart of MZM
Itâ€™s different this time because the Fed no longer matters now that we have lurched full bore into the worshipped virtues of globalization. And yet at the same time we continue to hang our hats on every crumb of innuendo flowing from the hallowed halls of our omnipotent financial slave mastersâ€”the Federal Open Market Committee.
Schizophrenia â€“ a mental disease marked by a breakdown in the relation between thoughts, feelings, and actions.
Does anyone else out there get the feeling of financial schizophrenia as financial expert upon financial expert races for the podium/microphone/camera/soap box to share their viewsâ€”most of which seem diametrically opposed, granted the usual hedge language?
We play the game ourselves, when we make prognosticationsâ€”most of which we should never be making. Deep down, despite our focus and effort to make sense of the real world, we realize, more one would rationally expect, playing the forecasting game is equivalent to a spin at the roulette wheel; thus we often refer to the â€śspin of the wheelâ€ť on days such as thisâ€”jobs Friday.
But itâ€™s always been this wayâ€”difference is we have more access to more useless forecasts thanks to the â€śprogressâ€ť of technology.
â€śIn trying to deal with macroeconomic developments, equilibrium analysis is totally inappropriate. Nothing could be further removed from reality than the assumption that participants base their decisions on perfect knowledge. People are groping to anticipate the future with the help of whatever guideposts they can establish. The outcome tends to diverge from expectations, leading to constantly changing expectations and constantly changing outcomes. The process is reflexive,â€ť writes George Soros.
Ladies and gentlemen, step right up and place your bets, the wheel is spinning!
Jack Crooks, Black Swan Capital Black Swan Subscription-based Service
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."