About Currency Currents

With Currency Currents, you can stay tuned-in to our current global-macro view and our analysis of key investment themes driving currency prices.

We consistently focus on the key asset classes responsible for the flow of global capital -- including equities, fixed income, commodities and, of course, currencies.

Nothing is off limits to us in this free-wheeling look at the markets. Some days you’ll receive ramblings on trading psychology, while other days we may take an academic approach in explaining esoteric economic issues. Ultimately we have one goal in mind: to help you get a handle on the key investment themes driving global capital flow. Because if you know where the money is going, it increases the probability that your position in the market will be a profitable one.

Who is Jack the Pipper?

Jack Crooks is Black Swan Capital LLC, President and Chief Trading Officer.

Jack is founder and president of Black Swan Capital LLC. He has also operated a discretionary money management firm specializing in global stock, bond, and currency asset management for retail clients. In addition, he was general partner in a firm specializing in currency futures and commodities trading. Neither firm is now in operation.

Prior to entering the investment arena, Jack worked in various corporate finance positions. He has written extensively on the subject of global currencies and international economics.

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ECB and IMF lift spirits. One Question: Who backstops the backstop?

Posted 1 year ago | 1:53 AM | 24 Jan 2012

Quotable

"The measure of a master is his success in bringing all men around to his opinion twenty years later. "

Ralph Waldo Emerson

Commentary & Analysis

I recently succinctly summarized my view of stocks with the Wily Coyote analogy. I got one very good succinct comment, and I am paraphrasing; I agree with you Jack but you have missed a lot of profit along the way. I can't argue with that. Neither technically nor fundamentally did I expect stocks to break above intermediate-term highs, measured by the S&P 500 cash index at 1292 back on October 27, 2011. But we sure have.

In retrospect, there is always reasons one is wrong. But if one is right, there is an assumption of being right for the right reasons--many a career are made based on that. However, any trader will take being right no mater the so-called reasons--ephemeral as they are. My retrospective rationale (a dangerous thing the art of rationalization) for being wrong (so far) was undrestimating the buy in by the market on the not so stealth European Central Bank (ECB) quantitative easing and on the idea of yet another backstop for the Eurozone as the IMF gets into the act.

But, when you evaluate the degree of leverage already in the system, the question I think we need to ask is: Who backstopst the backstop?

The two institutions tyring to keep hope alive are massively overextended--it would seem. (Granted, they can print till the cows come home and Lehman couldn't, but there has to be some logical limit here?) The leverage ration for the ECB is around 430 now, as measured by Assets divided by Paid-In Capital. Remember, Lehman Brothers went belly up when its ratio was only around 50. The US Fed's ratio is a whopping 109; that looks almost tame compared to the ECB largess.

If the global economy doesn't respond, and I don't believe it will because I do agree with Lacey Hunt at Hoisingtonwho expects a US recession during 2012, there will be blood. I am fairly confident of that. But as always, that nagging little question of "when" is a problem. And the lost profits in between do hurt.