Hey, I know I always seem to need to give these things nicknames (Armageddon ’08, Fiscal Cliff Kabuki Dance, etc.). Maybe that is a reflection of how non-seriously I take modern finance on a fundamental level. What we have here are policy and media driven hysterias, both to the positive side and the negative, swaying an emotional collection of players to and fro. It is more of a game than a science or well heeled, buttoned down profession.
So currently, on an interim basis we are working the ‘Anti-USD inflation trade’ (a bounce in inflation expectations and associated ‘hard’ assets) and the Euro QE ‘Me Too!’ trade, with its template being the US QE that has worked to hyper boost (stock) asset prices.
It appears that the mealy mouthed Fed, still refusing to bail out any savers that are left (both of them), has kicked another leg out from under the US dollar, which had for some reason been discounting a Fed that would begin raising the Funds Rate by now like a normal entity in a normal post-crash bailout environment would have done upon achievement of its objectives.
‘But no, we just need to tweak a few more positive data points out of it or wait until we see the white’s of inflation’s eyes’ implies the Fed. Whatever, the dollar is down this morning and the anti-USD inflation trade should get a bounce in its step, in line with one of our main themes. If the May low is violated, Uncle Buck could take a pretty deep correction.
Continue reading Anti-USD & Euro QE ‘Me Too!’ Trades Updated