I Have Great News – We’re Near Another Turn Lower

Let’s remark, for a minute, that today was a solid green day for us. I personally made 1.5% invested halfheartedly. These sorts of things are just not allowed by the laws of the universe.

I will get a drubbing. It’s ordained; once a year I need to get my clock cleaned. It was supposed to come from the SCO short, but I cut it loose after 15% downside, which took barely ~1.5% off my account. I won’t be let off the hook that easy.

The only other way to crush me now is lower equity prices.

Now, we’re pushing back to level with the old highs, pretending like nothing matters. Meanwhile, European sovereigns are being downgraded left and right, Greece is a laughing stock, Italy, Spain and Portugal can’t get into a growing stride, former star-child Ireland is being swept under the rug, the Middle East is literally on fire, and China is going into a hard stall.

US housing is good and we seem to be keeping head above water – that buys you a little leeway. Does it counter Planet Earth reverting to tribalism?

Take a look at the euro; just awful.

Here are some fun bullets from the European Trade Commission:

Total US investment in the EU is three times higher than in all of Asia.

EU investment in the US is around eight times the amount of EU investment in India and China together.

EU and US investments are the real driver of the transatlantic relationship, contributing to growth and jobs on both sides of the Atlantic. It is estimated that a third of the trade across the Atlantic actually consists of intra-company transfers.

The transatlantic relationship also defines the shape of the global economy as a whole. Either the EU or the US is the largest trade and investment partner for almost all other countries in the global economy.

The EU and the US economies account together for about half the entire world GDP and for nearly a third of world trade flows.

I know the good Forex Kong disagrees with me, having glanced over his work. However, we have different angles, as he is clearly a trader whereas I am looking for big distortions and moves that quake an ANOVA test.

The long term moves in the euro are a malediction on trade and investment between Europe and foreign nations. If the currency pushes into the mid 1.2 range, when coupled with persistent announcements coming from the Eurozone that remind us their leadership has no handle on the problem, and fear of a push to record lows will ripple across our markets.

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