Minus the chance that some lunatic is streaking through your living room, I think the pearls of wisdom in the above quotable can easily be applied to so many real-life situations these days.
I’ll apply it to one ...
It’s always difficult to pinpoint where we are in terms of a trend. Long-term trends in the currency markets have ranged from six to ten years, measured by the various bull and bear markets in the dollar since the inception of the free-floating currency market back in 1971. Here’s the pattern of long-term bear and bull markets in the dollar as measured by the US $ Index:
Where does one hide if bond markets everywhere look risky at the same time? In another excellent article by Ambrose Evans-Pritchard at the UK Telegraph, sent to us by a friend, Ambrose summarizes the latest very scary warnings from the Bank of International Settlements about sovereign debt crisis [our emphasis]:
“’The question is when markets will start putting pressure on governments, not if. When will investors start demanding a much higher compensation for holding increasingly large amounts of public debt? In some countries, unstable debt dynamics -- in which higher debt levels lead to higher interest rates, which then lead to even higher debt levels -- are already clearly on the horizon.’
Okay, this morning I am going to present a series of charts. Let’s play: Guess that country? Here is a hint: It is not China.
China may raise interest rates in the second quarter and economic growth could reach 9.5 percent this year, the China Securities Journal reported on Wednesday, citing central bank advisor Li Daokui. (Reuters)
Comment: It is about time China hikes rates. With inflation likely bubbling, and growth smoking, a hike by China would be no surprise. We have been expecting the same from central banks across Asia given their relatively high growth and low interest rates. A move on rates coupled with China letting its currency move higher (albeit much less than it should) should lead the way for continued strength in Asian block currencies ex- Japan. This is why we continue to like pairing the Asian block currencies, which are extremely undervalued, against the Euro block currencies, which we believe are still overvalued.
