Who can take a sunrise
Sprinkle it in dew
Cover it in chocolate
and a miracle or two?
The candyman can
The candyman can cause he mixes it with love and makes the world taste good
Commentary & Analysis
The Candy Man Can…
As you likely know, the euro spiked (is still spiking) to a fresh intermediate-term high today, as the dollar is generally being whacked across the board–but there have been worse days for Mr. Greenie–many of them in fact. The euro is the lead dog today and getting all the press. It’s acting quite well in the wake of Mr. Trichet’s press conference yesterday after announcing a 25 basis point rate hike as you can see in the chart below:
Maybe there is a very simple reason for the fresh euro leap of love today. Maybe its because Mr. Trichet is acting as central banker should, saying things such as: “We can’t please everyone all the time; we have to stick to our mandate of stable prices.”
Whether central bankers actually can control those things we call prices, or whether they simply react to situations after the proverbial horse has left the barn, at least Mr. Trichet is playing the role properly. He knows quite well perception in markets is more important than a reality few can get their arms around anyway. Perceptions lead real people to move real money.
Some, including me, believe this rate hike may be a bit premature, given the crushing austerity pressing down on the bad-boy states in the eurozone. But that also goes to the point: Mr. Trichet stepped up and made a decision which was likely extremely politically unpalatable. A sign of strength it is perceived; though the not so dirty little reality is the ECB is the central bank for Germany, just as the eurozone is the captive market for Germany. In case you have forgotten, one size fits all in the zone!
Now contrast this to the central banker role being played by Mr. Bernanke on this side of the pond. Ben wants to be everybody’s best friend. Heck, he even makes an appearance on the 60-minutes television show to prove to those who have never starred into a Reuters or Bloomberg screen, but don’t need to know their houses are unsellable, that yes, he truly is the Candy Man (and remember that remark I made awhile back, about there not being a housing bubble in the US, well, I was only trying to help you). We all know the Candy Man can!
The Candy Man can make risk asset dreams come true. With the right dose of sugar he can turn a barbaric relic into gold and make real wealth and purchasing power vanish in a blink of an eye….
Gold vs. US Dollar Index Weekly:
But for those with buckets of gold and silver hidden in their walls, purchasing power be damned…t brings tears of joy to their eyes–my esteemed, and increasingly smart Father-in-law (FIL) is an example.
With every tick up in his favorite metal, his IQ follows in direct correlation. That’s find, as I am finding his charity is also moving in the right direction for some reason. His charity, in the form of 15-year, instead of 12-year, Glenfiddich has led t a new level of love and respect to the relationship. Can 18-year be far?
Thank you Candy Man!