AUTOREFRESH 
Bad and badder
It looks to me as though the market has come to terms with the idea that the US economy is slowing. It also appears that the market expects the US to avoid a second full-blown recession and limp along slowly for the next quarter or two. Bad is okay, so long as it doesn’t get badder…
What the market did not expect was the European economy to show the resilience that it has thus far in the face of a sovereign debt crisis that nearly ended the European experiment. Asia continues to grow robustly, as do emerging markets.
If we view the global economy as a 5-cylinder engine, you have the US struggling, Asia more or less booming, along with emerging markets. Europe is unexpectedly humming –for now– (including the UK) and Japan is benefiting from Asian strength but not doing as well as it might. Taken together, you have a macro backdrop that is significantly brighter than we assumed just a month or so ago.
If it continues, it also suggests the US may yet right itself, especially if the government begins to bow to electoral considerations and moderates its policies to avoid chaos at the ballot-box come November. All this argues for better risk appetites in the next few weeks and months in my view…
Excellent Post Jamie and a great insight from a fundamental medium term perspective.
Thanks a lot.
Cheers
AUDUSD fell below asian session low and tested the teens of 0.89 once. Hard to judge whether this level would hold. If this breaks, 0.88 could be the next support. AUDUSD and NZDUSD seem to act as proxy for USD strength/weekness. Other USD crosses consolidate and could follow the price action in the next 8 hours or so.
european economy is doing well because of euro devaluation.
Above 1,3 Pigs are in trouble again. Below 1,3 US is in trouble.
The problem with the market is that it gets obssessed, and I mean really obssessed, with one idea and then violently switches to a totally different idea. What happened to the euro getting down to parity or cable is overvalued even at 1.3?!! What hapened to the ‘euro is finished’ theory? Give it a few weeks (maybe sooner) and you will see the greenback shining again.
A bit off topic, but the “day of reckoning” is near for stock markets. The upcoming play on the stock markets, is one of the most “no brainer” plays, in the past 15 years.
China is buying euro.
The chinese also with their low margins have problems with euro below 1,3.
Not for nuthin’ mike, but you have been singing the same song as long as I’ve known you…I give you points for consistency…
Amen Michael, amen!
Umm, not according to the banks that I talk too, luigi..they’ve been consistent sellers into strength…
Lol! That’s cold, man.
What is that play Michael?
Thnk u jamie.
Aren’t chinese interested in a trading range between 1,25-1,3?
They want just a weak Europe not a dead Europe.
So maybe they are are selling the strenght e buying the dips.
Also I think Mr. Obama want a weak dollar for the November election.
Isn’t it?
Being that I feel we’re coming out of the worse monetary cycle in world history and am in the Dow 4000 camp, I can see myself saying “day of reckoning” at some point since the implosion. BUT, I know i’ve never said that the one of the easiest index plays, in the past 15 years, is here. To sound even more batty, i’m going to say that this play sets the dominant trend for the next couple of years, as well! Ha! May as well go all out. I’ve got to update the topic, Raheem and then i’ll show you. This is flat out, child’s play.
One for Michael Miller…
http://www.telegraph.co.uk/finance/china-business/7913925/China-at-risk-of-bad-loans-warns-IMF.html
As one of the commentators mentions (jokingly?), not so good for Mercedes sales in China.
Such is the rampant growth in China, than I’m not sure how much the bad loans issue really matters.
Reminds me of the good ol’ Vigor.
Not to mention, there’s 65 million (yes, 65 million), vacant homes in China, FF. Nice work, China! You’d think that after Japan getting the ball rolling in the 80′s and the US following Japan off the cliff, that China would’ve finally figured something out there.
Michael, I’m sure they have enough people to fill the 65 million homes,… just might require a little price adjustment; If you earn $2,000 a year, and the apartments in Shanghai cost $200,000, … birth of the 200 year mortgage perhaps.
Keep up the good posting Michael.