Re: nincs cím

Still, the Monday after a still-rather gruesome October US employment report showed that the market seems remained caught up in the simplistic idea that liquidity is king. With liquidity as the only concern, the strange logic is that weak US data is risk positive, as it underlines the idea that the Fed will stay on hold indefinitely and this feeds the USD carry trade and stronger asset markets globally. Worst development therefore for risk? A strong economy! Obviously, this kind of silliness can only keep up for so long. Until "so long" arrives, however, the bubble-like USD carry trade and its affect on asset markets could continue to inflate if US data remains weak in the coming few months.

But at some point, either the US recovery gains enough momentum to trigger real fears of a Fed move (lower odds) or the bubble pops under its own weight and/or due to some exogenous shock (higher odds, with China as a possible source of a shock). We have fairly high confidence in the eventual negative outcome, but rather low confidence on the timing. In other words, we are unable to draw a bead on whether we face an imminent change of trend or whether current market conditions can stretch on for another quarter or two, or even more. All we can do therefore, besides revelling in the Socratic ignorance of knowing what we don’t know, is to look for intermarket signs and divergences that suggest the bubble risks implosion.