SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Mish's Global Economic Trend Analysis
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Moominoid who wrote (53530)7/19/2006 5:05:39 PM
From: YanivBA  Read Replies (2) of 116555
 
What I meant by "bearish signal scenario" is that if the BoJ is willing to contact money supply while the market drops on them, as they surprisingly have on the 18, than that signals that they are actually far more hawkish than the market discounts. Now I think they will tighten faster then the market expects and would not budge even if the market gravitates lower. The contraction of Yen supply should have two conflicting affects:

1) A rise in the in Yen/Dollar.
2) Unwinding of the carry trade.

We are most interested in what happens to liquidity sensitive assets such as gold and stocks. Well, I believe, a drop in the Dollar should continue to be risk favorable but the unwinding of carry trades is likely to be risk averse. Given the significance of the carry trade I think the affect of unwinding should prove dominant. I therefore read the actions of the BoJ on the 18 as an incremental, long term, bearish signal for everything liquidity sensitive (which by the operation of herd like hedge funds is about everything with positive momentum).

Sorry I could not respond yesterday. BTW, I am still a sideline bull, just until the inverting yield curve starts hitting the news. We will probably see that happen together with falling oil so that could be tricky. What do you think of the XHB volume today?

YanivBA.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News