Wednesday, March 20, 2013

The Only Chart That Matters

Zero percent interest rates and perpetual money printing makes the dollar a favourite funding currency for the global carry trades. Which means that if the dollar rises, the carry trades need to be reversed - quickly - before something breaks. What's the dollar doing? Rising (below). Which gets back to the theme "Nothing Matters Until It Matters". So far, this is just one more risk being ignored, however, when the dollar hits escape velocity, underwear will once again be stained on Wall Street...


The Only Other Chart that Matters - Copper - Prime Indicator of Global Economic Health. Breaking down after the economic news out of China this week. It's not just copper indicating slowing - Fedex, Caterpillar and Oracle today all warned on slowing growth. Deere was also downgraded. Four major economic sectors - Transports, Heavy equipment, Tech and Agriculture all whacked in one day. Nothing matters, until it matters...