Friday, June 7, 2013


Wonderful number, super number, best imaginable number.  What?  The jobs report silly.  Not to low indicating that the economy is still in the tank and thank God not too high which might make the Fed rethink QE III.  If that were ever to happen...oh the horror of it all.

Funny part is the stock market was waaaaay up at the open and stayed up all day to close up 200+.  Helicopters for everybody out to the Hamptons.  But the big surprise of the day was the Yen/Dollar trade with the Yen coming out waaaaay on top which nobody really expected.  A new day dawning?  Not really.  With the number the Yen short positions got unwound and hence the big move to the strong side.  I suspect it will be temporary as the position of the Abe government is clear; he is determined to inflate the economy and the quickest way is through import price rises which if one stops and thinks for a minute must occur as the one critical import is oil and gas.  So I suspect that for those with staying power a short Yen position is the way to go.

Now I could care less one way or the other but I find it fascinating how we have suddenly plunged ourselves into a currency war in which the major economic players in the world are all on the same side and following the same hymnal.  Some might argue that if that is indeed the case then there is no currency war but ignore the fact that if one asks Brazil or Mexico or Thailand or Singapore the answer might be very different indeed.  A rapidly devaluing Yen plays havoc in Exporting Asia (everyone) and a falling dollar cross rate make life very difficult for a Brazil in attempting to control money flows.  Is the export scenario the only idea left to increase the economic outlook for what are supposed to be developed economies?  I hate to sound like a broken record but it should be even more apparent to everyone ( save perhaps Little Paulie) that we have been trying some version of this for the past 5 years and it hasn't worked very well.  What it has done is to place ourselves in an increasingly awkward position on which Alan Greenspan actually commented today as to whether the implied Fed target were reached or not to begin the scaling back of QE III, perhaps we should begin to do so in any case to avoid what will probably be a greater need at a more accelerated pace in the future.  An interesting comment from one who rarely has any comment on present Fed policy.

But today was "just right" as the story goes and we all went home happy.  Here's to more days like today.  But let us remember that out there in the 100 acre wood there are three bears some where none of which is named Shelia.  A wonderful forecast for the next few days in the fly-over zone.  I'm going to enjoy it.

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