Thursday June 7, 2007 - 10:43:37 GMT
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Black Swan Capital - www.blackswantrading.com
â€˘ New evidence that American companies are having a hard time keeping labor costs under control raised worries about a pickup in inflation, sending stocks tumbling. (WSJ)
â€˘ New Zealand's central bank unexpectedly raises interest rates to 8% sending the currency to a 22-year high. (BBC)
â€˘ Key Reports Due (WSJ):
8:30a.m. Initial Jobless Claims. Expected: +2K. Previous: -4K.
10:00a.m. April Wholesale Trade. Expected: +0.4%. Previous: +0.3%.
10:00a.m. DJ-BTMU Business Barometer. Previous: +0.2%.
3:00p.m. April Consumer Credit. Expected: +$5.8B. Previous: +$13.5B.
Quotable -- Hmmmâ€¦now sheâ€™s talking up the market.
"Investors should have confidence in the country's economy.
"In a situation where the economy is growing, the stock market's advance is inevitable and long-term gains in the Chinese market are inevitable."
People's Bank of China deputy governor Wu Xiaoling
FX Trading â€“ Question time?
Thereâ€™s been a lot of tough talk on â€śinflationâ€ť lately from the worldâ€™s central banksâ€”and thereâ€™s been some action. And the action has been noticed by the bond and stock market:
But the $415 trillion question is: Have central banks lost control over the waves of liquidity sloshing around global markets? The latest Morgan Stanley numbers, as we showed on Tuesday, suggest that itâ€™s a fair question at least. Global derivatives rose to $415 trillion at the end of 2006.
Is it any wonder why spreads on risky assets are so tight?
Is it any wonder why Private Equity bids for stuff with such complacency?
Is it important for the market to believe, rightly or wrongly, that central banks do still drive global credit?
Is it time for the worldâ€™s central banks to dole out a little credit lesson in the form of substantially higher interest rates?
If higher rates do rein in even a modicum of credit growth, how much will it matter, i.e. will it prove itâ€™s that â€śat the marginâ€ť stimulation that matters most?
And last but not least, the question on the minds of currency types today: Will the Bank of England issue a 50-basis point shot across the bow of the â€śhooked on creditâ€ť crowd?
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