Monday, December 03, 2007


Keep an eye on the Japanese Yen as it continues to get stronger this morning. US equities have a strong inverse correlation to the Yen and the carry trade continues to unwind with a stronger Yen.

The ISM Manufacturing Index is the major economic report out today. Keep an eye on this one as it has a strong ability to move the market.

A recession is already here for corporate profits not to mention housing. Is the US economy next ?

Moodys is cutting ratings on another $105 billion of SIVs. Further write downs are likely to follow.

Is the stage being set for a Dollar rally in 2008 ? Nobody wants anything to do with the Dollar and it appears the dumb money are moving out of the USD - think Gisele Bundchen and Jay Z. A Dollar rally will probably hasten a decline in US equities since US markets have risen in the since 2003 by the same percentage as the USD has declined. Given a scenario of a rising Dollar, US equities may fall as a result.

I added some more QID and FXP into the close on Friday. Lets see how things turn out today.

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