Hello Roebear, <<Trade deficit up, gold relatively flaccid, dollar up?
Strange mkt>>
... if we were in a movie, and the environment turns strange around us, then we must exercise maximum caution, because 'things are not right' :0)
Perhaps the <<trade deficit up>> because it cannot go down, until folks simply stop buying or are forced by circumstances to stop buying.
Maybe <<gold relatively flaccid>> because (a) the USD carry trade folks who piled into gold now need to file out, as their other trades (junk bonds, long equity) starts looking dangerous, and/or (b) folks need to sell gold to pay bills. I would imagine that gold will rise again after the smoke clears, even though gold shares may get hurt in the deluge that hurts all paper equity.
<<dollar up>> possibly due to the same reason gold is flaccid, as in when important folks start to shrink their leverage and compress their trade book, everything heads down, except the dollar?
Who knows. As you say, events are starting to go strange.
I have given back my earlier unearned gain of 4.46% for 2004 and am now at 0.52% 2004 YTD NAV gain, mostly because
Message 19675716 <<Jan 10, 2004 ...
The Annual Party That Is A Contrary Indicator – the big play of 2004
I had a lunch with an Australian friend yesterday, and at the table next to ours sat a couple who attends a party held by a mutual friend that I have traditionally attended. The annual party is held sometime during the month of December, and it has been the case (and is a running joke amongst some of us) that whatever aggregate bullish conversation takes place at the party, sell, and whatever consensus bearish thoughts get expressed at the event, buy.
The party indicator has worked for the buy-in and sell-out of Hong Kong real estate, Red Chip Mania, Asian Financial Crisis, DotCom Boom, Currency Bust, Nasdaq Reflation (although I chose to ignore this play) and The Age of Gold/Commodities.
I was not able to attend the party this past December because I was in Beijing, and so I interrupted the couple at the next table and asked what the gist of the conversation was at the December party. The man, a bond trader, said, 'the conversation all around was how wonderful everything is'.
I just spoke on the phone to the host of the party, and yup, he is hunkering down.
The host also noted that the guests at the above-mentioned party were finding it increasingly difficult to hold USD/HKD in the current context Message 19675660 , but with the exception of my friend the host who tags along on some of my trades, no one else is even thinking gold.
I thought, after mulling over what I heard, 'oops, stocks will crash, bonds will tumble, but the USD will bounce up, even though the gold bull may have a long healthy future yet'.
So, is there a scenario where stocks, bonds, real estate and non-USD currencies gets trashed, and the USD cash and gold goes up? This is the play indicated by the 'contrary Xmas party'.
In fact, the answer to my question is yes. The trigger would be stagflation, accompanied by a rising USD interest rate AND a rising gold price!
2004 is getting difficult to navigate already, for I may need to short more of the general equity market soon, in some fashion, or by other ways, even as I might have to de-camp my cash troops from Euro/Yen/DKK/AUD/CAD territories and send them into USD-space
Here are some postings about the Contrary Indicator Parties past, and you may recognize some of them, as they are from the magical Softbank era :0)
Message 12436491 <<January 1st 2000>>
Message 14980719 <December 8th, 2000>>
Message 16843039 <<December 29th, 2001>>
Message 16843049 <<December 29th, 2001>>
There was no contrary party held by my friend in 2002 Xmas season as he and family were out of town, and so the party started in earnest on Wall Street in 2003.>>
Chugs, Jay |
