Cashin On YEN-- Gartman on Global Equity Bear----
Art Cashin is commenting that it is the YEN that is moving the US Stockmarket.
There Was Data. There Was News. There Was Fedspeak. But The Markets Cared
Only About The Yen – The pundits will try to tell you that the Fed’s Tan Book caused this
or that.
Others will point to other data bits or comments by Fed speakers. Nice try – but wrong.
Wednesday’s stock trading can be summed up very simply. When the Japanese yen weakened to where it took more than 116.5 yen to get a dollar, stocks rallied. Late in the day
when the yen rallied to the point where it only took 116.0 yen to buy a dollar, stocks shrank back and closed down on the day. That’s the whole story but that won’t fill up six hours of TV coverage so you heard lots of other (wrong) theories.
Cashin’s Comments March 8, 2007
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It’s The Yen Again – As dawn breaks in New York, Asian markets have rallied and U.S. futures are strong. Why? The yen has sold off significantly. This morning you need 117.15 yen to get one dollar. The “carry traders” feel much less threatened.
An Icon Touches The Third Rail Or Maybe Just A Deep Collective Anxiety – We had the pleasure of entertaining our friend, Dennis Gartman on the Floor of the NYSE Wednesday morning. Dennis is always a celebrity in any trading community but yesterday he was surrounded like a rock star.
We missed his appearance on Dylan Rattigan’s show, “Fast Money”, on CNBC Tuesday night. By the attention Dennis drew on the Floor, I may have been the only one who missed it. Even some of the CNBC executives, who were at the NYSE to ring the opening bell for a promotion, came over to Dennis.
They said his appearance and specifically his comments had produced an avalanche of emails.
Dennis had apparently stunned his fellow panelists (and a chunk of the audience) by stating that he thought markets were signaling a global bear market which would be revealed after a couple of weeks of choppy volatility. He also suggested that a combination of “corn and crude” would outperform a basket of “brokerage and banking” stocks over the next six months. When Dennis talks, you don’t need a translator.
The crowds who came to talk to him ate up most of his time so we didn’t get to chat much. We hope to make up for that when he and Margaret return in April.
My Bartender, The Philosopher, Says Be Careful What You Wish For – Or – Why Having Access To The World In A Device
On Your Hip May Not Be Ideal – I have a bartender who is a philosopher. Now, I suppose you think all bartenders are
philosophers but they are not. All bartenders are certainly psychologists but only a few are philosophers - and this one has a degree in philosophy. By convenient coincidence, this philosopher/bartender is named Saporito. Now, if you’ve had about four years of Latin, you know that “Sap” is the root base for “wisdom”. “Verbum sat sapiente” is “a word to the wise is sufficient”. “Verbum” being word. “Sat” being enough (as in satisfied) and “sapiente” being wise (as the object of a preposition). Our species is designated “Homo Sapiens” or Thinking Man.
At any rate, it is a slow evening at this establishment close to the Exchange. It is not teeming with traders as normal. So philosopher Saporito and I get to chat. This evening, perhaps inspired by Dennis visiting the NYSE, I am recounting the discussion I had with John Mauldin and Dennis and Margaret Gartman the last time they were all in New York. If you don’t recall, it was all about the accelerating changes in technology that are giving us cell phones that take pictures, play music, connect to a computer and bring us the events around the globe instantaneously. I recount that this prior discussion pondered whether we would soon have the fabled Library of Alexandria on our hip with instant access to all human knowledge.
My philosopher/bartender wrinkles her nose and says – “Be careful. Remember Phaedrus.” Now even if I had not consumed three bowls of ice cubes (with sauce), I might have taken a minute or two. Phaedrus was Plato’s retelling of the meeting of his teacher, Socrates, with the latter’s friend, Phaedrus. Sensing that I was sorting through my Phaedrus file for the connection to the topic, the
philosopher takes me off the hook by saying “Toth and Thamus.” Suddenly, the light bulb goes off.
As you probably recall (faster than I did), Toth was one of the higher deities of the early Egyptians. He was very creative and was said to have developed things like mathematics, geometry and writing. He offered them all to mankind by offering them to King Thamus, King of the Egyptians. Thamus thought many of the things useful and good but had reservations about “writing”.
Toth, the god, thought writing would make knowledge permanent, something that could be passed accurately, maybe immutably, through centuries and maybe a millennia. How could that not be good? Thamus, the king, had grave reservations. Writing would mean that students need not listen carefully to their teachers. They would not need to use their memories. They could always just look it up. Without the teacher/student conversational challenge and
response, would learning – true learning – suffer? Would people fail to question and evaluate as true learning requires?
That, I realized, was why my friend and philosopher/bartender reached back to Phaedrus. If we have all the presumed current
knowledge instantaneously on our hip, we all become passively acceptant and unquestioning. Would we all get an instant,
homogenized, predigested view of news, events, and data? Would that, in turn, freeze, or at least slow, man’s search for truth and maybe stagnate the growth of knowledge. Maybe those questions are not applicable to the evolving devices on our hips. But questioning is the basis of knowledge and – as the Socratic Method suggests – philosophy. Maybe that’s what my friend the bartender was aiming at.
Overnight – The key event is the aforementioned drop in the Japanese yen. That has encouraged bids in stocks and various
commodities. Even Alan Greenspan has begun talking about the “carry trade”. In a speech he suggested the carry trade was still going strong but cautioned that…“at some point it’s got to turn”.
Cashin’s Comments March 8, 2007
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Today – The President is out of the country. Pre-opening we’ll hear from the Bank of England and the European Central Bank. We’ll also see the Initial Claims data. At 10:30 comes Natural Gas inventories. Consensus – The fall in the yen should give the bulls a chance to regroup and shore up their defenses. |
