Jack the Pipper

It’s always difficult to pinpoint where we are in terms of a trend. Long-term trends in the currency markets have ranged from six to ten years, measured by the various bull and bear markets in the dollar since the inception of the free-floating currency market back in 1971.

Where does one hide if bond markets everywhere look risky at the same time? In another excellent article by Ambrose Evans-Pritchard at the UK Telegraph, sent to us by a friend, Ambrose summarizes the latest very scary warnings from the Bank of International Settlements about sovereign debt crisis

Okay, this morning I am going to present a series of charts. Let’s play: Guess that country? Here is a hint: It is not China.

It is about time China hikes rates. With inflation likely bubbling, and growth smoking, a hike by China would be no surprise. We have been expecting the same from central banks across Asia given their relatively high growth and low interest rates.

Playing for Japanese yen weakness is one of our favorite long-term trades at Black Swan Capital; besides being short the euro against any other currency with a pulse. The yen has started to weaken against the pack–finally.

Other real (physical) asset investments in the real economy (land, plant, equipment, etc.), that appear relatively cheap at the beginning of recovery thanks to the impact of recession, compete with gold as an investment class once again.

Well, if true, stocks did it again. They forecasted a recovery. The optimists have been right; piling into stocks with confidence as they climbed the proverbial Wall of Worry. The worry warts (guilty as charged) look like they were wrong; especially if the China credit bubble concerns prove untrue.

A reader shot us an email yesterday to bring up two things: 1. That a good number of analysts he follows is expecting the Canadian dollar to continue strengthening versus the US dollar. 2. That a good number of analysts he follows is expecting the euro to weaken substantially still versus the US dollar.

Let’s see: Twenty-years of Keynesian pump priming in Japan; cost-several trillion Japanese yen; mired deep in deflation with anemic industrial production-priceless!

Friday was a good day for the euro. But it wasn’t enough to eke out a gain on the week. And that could be very telling.