Following up last night’s post, Arthur left a note on the blog linking an article from Bloomberg Businessweek, written by Brendan Greeley. The language of the article is crystal clear and provides another example of a Euro policy maker claiming far more insight than the collective wisdom of Mr. Market. “Investors ,he told the Bundestag, are ‘charging interest rates to countries they perceived to be the most vulnerable that [go] beyond levels warranted by economic fundamentals and justified risk premia. This fear is “unfounded. The market is wrong.’”
Posts Tagged ‘Gilt’
In a relatively quiet trading day, the GOLD market rallied $25 after spending most of the PIT TRADING DAY attempting to break and set up a correction to the recent rally. Shorts ran for cover. WHY? Two stories that gave the rally a rationale:
2. A STORY IN THE NEW YORK TIMES “GROWING AIR OF CONCERN IN GREECE OVER NEW BAILOUT,” by RACHEL DONADIO.
This was a State of the Union that was hyped with so much HOPE for restoring real growth and JOBS to America. As I read the entire leaked speech–which was leaked in entirety–I kept waiting for the real thrust to stimulate growth and I missed it. Simplifying the tax code is a noble endeavor but we have all experienced the inability of Congress to crush the self-interests that without presidential leadership it attempts fail under the weight of lobbying dollars. Ending the tax breaks to energy companies so as to finance the switch to clean energy is nice but oil explorers will lobby or else move to exploring in nations that require the advanced technology that U.S. energy companies thrive on and they will entice them with all types of incentives.
Allow me, readers, to journey down the rabbit hole. I believe a major theme in 2011 is that many of the high correlative trades are going to break apart and fundamentals will prevail over mere mathematical permutations (hence NOTES FROM UNDERGROUND WHERE 2+2=5 is also a beautiful thing). One of the areas of decoupling will be in the area of DEVELOPING MARKETS where all nations are not equal. Russia is one of those nations that I believe will outperform, as the rising middle class will continue to push for more development that is not just natural-resource based. Now I am not naïve and certainly understand the pernicious nature of Putin and his kleptogarchs and the failure of the rule of law. One of Yra’s laws is the MONEY IS FASCIST, by which I mean that money in search of a high return will tolerate autocratic rule. History certainly bears this out, especially when we are in a greed cycle rather than fear.
“EVERYBODY HAS A STRATEGY UNTIL I HIT THEM”