One Day Scare

Looks like markets are dismissing the potential Dubai World default as a catalyst for a meaningful correction. Nice outline of the situation by Telegraph: Dubai’s financial crisis: a Q&A.

If the markets dismiss this as a not strong enough catalyst it will show the strength of the belief of the global economy is recovering. I think it all comes to the U.S. dollar now. If we have flight to safety and dollar moving sharply we would have a carry trade unwind and all risky assets moving sharply down – I don’t see this coming for the time being.

The broader picture of all this is commercial real-estate fall in value that will cause similar events; but that is a issue that will come down the road.

Asia had a large down move yesterday with all the mayor indexes loosing 3% or more. The raising yen being the accompanying factor to the Dubai debt problems. The news on potential Japan intervention in the currency markets could be a potential driver of U.S. dollar appreciation. Bloomberg story: Fujii Says Japan to Contact U.S., Europe If Needed as Yen Jump.

The banking sector has been hit on speculation who has the Dubai exposure. Commodities also being hit hard.

I’m contemplating strategy for today’s trading. Mayor candidates are short treasuries; long agricultural commodities; long precious metals; long Greece equities (a risky one). All contrarian ones.

Remember my euphoria on a free afternoon notion; I went to cinema to watch The Informant!; the trailer was interesting and it has some connection to the stock market as it’s covering Archer Daniels Midland price fixing scandal; it came out to be a disaster. The story is stupid (at the end I didn’t understand what the heck happened) and boring to the level it annoys you like a pneumatic hammer waking you up on Sunday morning. Don’t watch this trash!!!

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This entry was posted on Friday, November 27th, 2009 at 3:39 am and is filed under Markets. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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