Seeking Alpha
, Random Roger (173 clicks)
Portfolio strategy, ETF investing, foreign companies
Profile| Send Message|
( followers)  

roger nusbaumRoger Nusbaum submits: Remember way way back in February when the world was terrified of the carry trade unraveling?

This chart shows the kiwi rallying 8% against the yen since March 5, the Aussie up 4% against the Swissi (this pair is sort of a measure of investor confidence where a strong Aussie implies a lack of fear), and the U.S. dollar up 2% against the Japanese yen.

Kiwi vs yen etc 30 03 2007

So the currency market shows fear is diminished. This is probably 180 degrees from the oil market, depending on how you take a rising oil price -- a barometer of increased demand from higher growth, or an escalation of fear?

Maybe gold has the answer? In the time period charted, the streetTRACKS Gold Trust ETF (NYSEARCA:GLD) (client holding) is up 4%. Is this because of inflation fear coming from healthy growth, the expectation of a weak dollar due to U.S. economic weakness, or something else?

And just what is the yield curve trying to say?

You probably see where I am going. A particular trend in something, like any of the things mentioned, can have different meanings depending on the situation. Above, I question whether any of these things could be due to growth picking back up. Brian Wesbury from First Trust is on CNBC all the time saying we are still chugging along in a healthy fashion. While I disagree with him, he could be right.

The point is that sometimes, for example, gold going up means one thing and sometimes it means something else. If you are going to try to decipher the meaning of these things, you may have to look at things in a way that is counter-intuitive to you.

For example, I have been in the inverted curve means recession camp. If it turns out there is no recession, I am going to want to try to understand why so that if something similar comes along in a future cycle I will be better prepared.

We all get things right and wrong. Learning from the wrongs is part of the job description.

Source: Major Market Indicators: A Portrait of Confusion