Thank goodness the Dubai default fiasco is finally behind us. A couple days of global market chaos is enough. Now we can go back to our normal routines – buying dips and selling dollars.
For a second there Jack got me a bit worried. All that talk of hold-on-to-your-hats-thiscould- get-crazy. I mean: sovereign default? Contagion? Sustained risk event? Really?
Gosh, it was looking so good. All those buildings, fancy shaped islands, money, and oil wealth. Who would’ve thunk it? Well, not the credit analysts, we know that now.
Nov. 27 (Bloomberg): “One cannot rule out -- as a tail risk -- a case where this would escalate into a major sovereign default problem, which would then resonate across global emerging markets in the same way that Argentina did in the early 2000s or Russia in the late 1990s,” Bank of America strategists Benoit Anne and Daniel Tenengauzer wrote in a report.
Financial Times: Federal Reserve officials have expressed concerns that near-zero interest rates could fuel “excessive risk-taking in financial markets” but believe the possibility of such an outcome is “relatively low”, minutes from its November meeting show.
Say what? Is that a misprint? Is it parallel universe time? Mr. Einstein, please call your office!
Perhaps you saw this morning’s release of Euroland’s economic data.
German GDP jumped by 0.7% in the third quarter. Adding to GDP was an inventory build and capital investment; subtracting from GDP was consumption and trade.
Not so stellar, but somewhat reassuring nonetheless, was an increase in new industrial orders – rising 1.5% since last month but still down more than 16% from a year ago.
John Ross wrote in a recent Currency Currents he didn’t want to rip-off the Milk Board advertising campaign by asking if you’ve “Got Gold.” But it appears more and more have “Got Gold.” Yet another new high was chalked up this morning in white-hot yellow metal. This comes at a very bad time for me and may reflect a lot deeper systemic concerns than we now realize.
