We've seen four weeks of post Dec. 8th heroin withdrawal after an orgy of money printing, and so far the effect has been to sharply and suddenly rollover the stock market (especially the higher beta Russell 2000).
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Meanwhile despite the liquidation of perhaps half the large offside speculative anti-USD bet, the USD has only managed a feeble and not very impressive rally.
jessel.100megsfree3.com
My conclusion is I'd like to see how the Wizards play their monetary hand, but I suspect they've shot their MoP wad, and will find themselves in a real pickle, ending with the USD levitating around 84-85 (and even that's only if they refrain a few more weeks from their bad money printing habits), and a large measure of the hot money crowd already departed from the trade the Fed tried to manipulate to advantage. Meanwhile if they don't feed Seymour
lyricsondemand.com
the strong heroin with coupon passes, and securities purchases and lending, then the stock market continues it's swoon. If they revert back to feeding Seymour what he needs, then there is nothing to support the USD, and the hedge funds and speculators move back in for the kill, and this time it will be the coup de grace. I suspect the later will be the outcome, with the drama unfolding rather quickly. The next round of USD weakness will be amplified even further by piss poor economic news, and the need to engage in more bogus Keyesian economics (the Mish scenario) of keeping money loose and cheap. When that happens we will see a real severe currency panic underway. One thing to look for is the Europeans getting the debasement game, as that would cause more of a flucht in die sachwerte run. |
