Wednesday November 15, 2006 - 10:59:03 GMT
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Black Swan Capital - www.blackswantrading.com
â€˘ Key Reports (WSJ):
7:00a.m. MBA Refinancing Index. For Nov 10 Wk. Previous: +11%.
8:30a.m. Nov NY Fed Manufacturing Index. Expected: 17.00. Previous: 22.92.
2:00p.m. October FOMC Minutes.
â€śAll animals are equal, but some animals are more equal than others.â€ť
FX Trading â€“ Goldilocks lives
Lower inflation and a healthy consumer means Goldilocks livesâ€¦
The stock market liked yesterdayâ€™s retail sales and disinfllationary PPI numberâ€¦
â€¦while dealers in the FX market loved it! They whipsawed players out of long dollar positions on the headline retail sales number, even though underneath the number looked just fine once the impact of lower petrol spending was consideredâ€”which in effect means more money in Mr. US Consumerâ€™s pocket.
An email from a friend of CC following yesterdayâ€™s retail sales and PPI number sums it up well:
â€śInflation falls sharply.
â€śFed on hold (I read that on the BSCC letter).
â€śSo...US real interest vs Euro real rates are
Iâ€™m going with (a), with an emphasis is on the world â€śreal.â€ť
As long as the â€śFed on holdâ€ť view remains intact, the dollar looks relatively well supported by the US economy. Because you remember the old adage; higher 30-year bond prices equals a higher dollar (Well itâ€™s not really an adage, I just made that up because of the comparison chart below):
US $ Index vs. 30-year T-bond Futures Prices Daily
A decoupling of late between 30-yr bond prices and the dollar as you can seeâ€”if the US dollar starts playing the catch up game, it could get interesting.
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