Don’t Let the Facts Get in the Way of a Good Story

Key News

Key Reports (WSJ):
7:45 a.m. ICSC Chain Store Sales Index For May 16: Previous: +0.3%.
8:30 a.m. Apr Housing Starts: Expected: +3.9%. Previous: -10.8%.
8:55 a.m. Redbook Retail Sales Index For May 16: Previous: +0.1%.
4:30 p.m. May 15 API Oil Industry Report
5:00 p.m. ABC/Wash Post Consumer Conf For May 16: Previous: -42.

Quotable

"After today, whether you’re a goat or a hero, you’re gonna make me a great story.”

                              Max Mercy

FX Trading – Don’t Let the Facts Get in the Way of a Good Story
The second ‘Key News’ headline I included above is the type of news item I consider in formulating a fundamental view of the economy and markets.

The first ‘Key News’ headline I included above is the type of news item that says “forget the second news item, you idiot; bad news doesn’t matter anymore.”

So let’s not let the facts get in the way because, really, the market is wearing rose colored glasses … and love’s what it’s seeing. German investor confidence is pumping at a time when the most recent growth numbers came out ridiculously negative for Europe’s largest economy.

As Jack said this morning upon flipping through the headlines: “I guess it is 2001 all over again.”

If that’s the case, then clearly no one should be holding US dollars. You’d want other currencies. Or you might even want stocks since that’s the only thing the currencies seem to care about these days.

The Australian dollar is already back on the horse, knocking out the recent highs marked before risk appetite took a breather last week. Same goes for the pound – it barely flinched.

Of course, stocks have yet to retake similar levels … but that doesn’t matter because the feeling seems to be that they most certainly will. Last Tuesday’s Commitment of Traders report shows that non-commercial longs outnumbered non-commercial shorts by almost 2 to 1.

The comparison to the previous reported showed little change to the long position but a notable reduction in short positions. The two Tuesday reports straddled the recent daily high and could simply show that shorts are having trouble hanging on in this environment that’s just not that bad anymore, I guess.

The Japanese yen hit the deck hard yesterday. Is this a sign the risk-taking crowd is rested and raring to go?