Wednesday April 4, 2007 - 12:10:53 GMT
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Wednesday 4 March 2007 http://www.blackswantrading.com
â€˘ Late Bills, Defaults Increase For Subprime Home Loans; Problem Expected to Deepen (WSJ)
â€˘ Cautious Consumers Hinder Japan's Growth (WSJ)
â€˘ European Service-Industries Growth Stayed Close to Six-Month High in March Bloomberg
â€˘ Corporate Investment Has a Bad Case of the Blues - Bloomberg
â€˘ Key Reports Due (WSJ):
7:00a.m. MBA Refinancing Index. Previous: -0.5%.
7:30a.m. March Challenger Layoffs. Previous: +33.4%.
8:15a.m. Mar ADP/Macroeconomic Advisors Employment Estimate. Previous: +97K.
10:00a.m. Feb Factory Orders. Expected: +2.4%. Previous: -5.6%.
10:00a.m. March ISM Non-Manufacturing Business Index. Expected: 55.0. Previous: 54.3.
â€śAt this point, there are still more questions than answers as to why capital spending is weak. That's a good thing when all the answers provided point to crummy outcomes.â€ť
-- Caroline Baum
FX Trading â€“ Yen-Carry Trade is Hot, but â€¦
More than a month has passed since a major liquidity scare yanked the rug out from under global markets. Unwinding of the yen-carry trade and a horrific U.S. subprime mortgage market dominated headlines and had investors rethinking their risk-taking appetite.
Consequently, a sell off commenced in the Far East and quickly spread west. Perma bears shouted â€śI told you so!â€ť from the roof tops as soon as major markets began to tumble. Equity markets received the most attention, dropping as much as 5% in the U.S and 9% in Asia.
But that didnâ€™t last long.
The S&P 500 is advancing and testing recent highs. Same goes for other U.S. indices. A breakout would open the door for a try at new all-time highs. Over in Asia the markets bounced back even faster and, for the most part, have knocked out their February peaks. Risk taking is back â€¦ but whatâ€™s to say an event that pushes global markets sharply lower, and without notice, canâ€™t happen again?
A formidable recovery by equity markets around the world has rekindled a smoldering yen-carry trade. Borrowing on the cheap has left the Japanese currency back where it started, and back on the minds of the Group of Seven nations who meet for discussion on April 13.
You might recall yen weakness leading up to the last G-7 meeting. Itâ€™s hard to imagine any direct interference by the G-7 but donâ€™t underestimate the marketâ€™s power at leveling the playing field. Itâ€™d be dĂ©jĂ vu all over again.
G-7 speculation triggered yen strength last time around. We can only wait to see what the markets have in store. Until then, the yen-carry trade is very much the craze. Get it while the gettinâ€™s good!
John Ross Crooks III
Black Swan Capital
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