Jack the Pipper

Unfortunately the German parliament voted to approve 22.4 billion euro loans for Greece today. The euro bounced on the news. I was hoping of course for lawmakers there to finally drive a stake through the heart of that silly artificial government bungled construct known as the single currency and do us all a favor.

A heck of a week for the buck so far, right? Granted we still got a lot of time left before it sticks, but the weekly bar on a chart of the US Dollar Index looks rather impressive

Ah…is Mr. Market finally waking to the systemic global macro threat that was always lingering in the background of Eurozone debt default? “Yes indeed,” he said. There is much talk of the dreaded “C-word” in the financial press this morning–CONTAGION! Keep in mind, if you utter the word contagion the words emerging markets (EM) must come next.

In a game of relative value, there’s been good reason to put your money on the Australian dollar. The simple carry-trade theme makes Australia an obvious choice during a time when general financial market risk is surprisingly absent.

Our Demagogue of the Year Award goes to Mr. Warren Buffet

The straight jacket of the euro is what we call this. I wonder how many politicians within the fiscally broken states have the courage or the ability to force these kinds of internal adjustments. It may be a lot easier to just leave the euro and devalue accordingly. Can you say Drachma, Lira, Escudo, and Peseta?

When the “moral champions” of the world gang up on Arizona, Arizona sells pesos. That seems to be what happened this week in the wake of Arizona’s crack-down on illegal immigration.

Gotta love that quote: “…simply transferred from one perception to another.” It really does sum it up well. We know Blue Horse Shoe loved Anacot Steel…we know gold bugs love gold…we know commodities bulls love all things commodities…and we know Morgan Stanly loves Brazil…

The only question we have is whether or not the euro goes to par quickly on some type of Eurozone crisis, or just grinds lower and lower in the months ahead. Either way, we want to remain positioned short the euro against the dollar and ride this move for all its worth. This research piece lays out the key reasons why we are confident in that view.

Our longer term dollar call for a while now is simply this: The US dollar entered a multi-year bull market after bottoming in March 2008. If that proves correct, it is likely we will witness some major changes in correlations that seemed to be such layups during the US dollar 7-year bear market phase.