Registered: May 2004
03-03-11 04:18 PM
Quote from Daal:
I'm on a defensive position of 50% of my old exposure, will buy back the other 50% as soon as I think the correction is over
'Not a chance by the way, a MENA blow-up will give Ben the excuse he needs to keep pumping'
So far from what I've read of president and governors speeches indicates the opposite, they are looking at iexpectations(Don Kohn made this point as well).
If they were to go up that would lead to a wage-price spiral which would lead to higher inflation and more spirals which would hurt employment even MORE. So they would have to stop that even though the UR is quite high, this is what the FF market doesnt seem to understand, MENA makes policy be tighter than otherwise, its basic Friedman economics here, if given a choice between letting inflation get out of control but supporting employment and hurting employment but controlling inflation, they pick the latter, specially given that the former will hurt employment EVEN MORE in the long-run
Matter of fact just yesterday Bernanke made a similar point in congress and mentioned Chairman Volcker decision to end inflation
Wow. He mentioned Volcker. I guess that seals it. If he mentions Jacques Reuff tomorrow, does that mean he wants to go back to gold standard? It's just talk, you realize. These guys remember 2008. If oil goes back to $150, they will not be tightening. An oil shock of this sort would be profoundly deflationary.
As I watch the air come out of EU equities, particularly at the periphery, I am reminded of a familiar scene which we will see if it plays out ... market goes spastic (down) and the yield curve flattens (euribor futures destroyed today) at the sign of a hiking cycle. Central bank trots out one of its people to insist no such cycle is at hand. Stocks rally, currency plummets. I am currently screening euro bear put spreads and expect to put a few on before day's end.
FWIW, the U.K . and U.S., where the punch bowls continue to be spiked are the outperformers today.