The last two days have been very interesting to watch. Interesting enough for us to take the time and post, which has become the exception to the rule. Its seems the duo of Paulson and recently added big gun Bernanke had started to make head way against the dollar/oil imbalances, until yesterday.
In swoops Trichet. Was this the same Trichet yesterday that urged citing the dollar during the G7 meeting and subsequent press statement? The same Trichet that has been harping the US about the low dollar in several noted press conferences. In the past it has seemed that world central banks have worked together. Is Trichet trying to assert the new found global power of the ECB and his speaking platform? Although central banks are-- supposedly-- independent entities, we would argue that they are political entities into themselves.
What does raising a quarter point by the ECB really mean. Higher Euro and higher borrowing cost for our European brethren. It has been our experience that economic growth can fade rather quickly. We think the ECB is about to knock the living hell out the Euro district. Remember, this is a relatively new central bank, as compared to the federal reserve, and a fairly new confederation of nations. We have been contemplating lowering our international exposure (EFA) for some time. Although potentially a bit early, now could be the time to take advantage of Friday's moves to do just this.