International Capital Flows (22:35)
The fall in the US Dollar and US Treasuries over the last 5 weeks has surprised me.
I thought investors would take some profits on Equities and rotate into Bonds. And the US Dollar would continue to strengthen as capital saw the US economy improving. The last place I thought investors would want to be was Europe and so the Euro would fall.
Err, not exactly. That thesis totally ignores the role Central Banks are playing – and particularly what the Bank of Japan is willing to do. Thanks to some ZeroHedge analysis we can see how far the Central Banks are willing to intervene.
Even giants like Stanley Druckenmiller, a partner of George Soros, doesn’t like what he sees:
“That’s how I started. I watched the stock market, how equities reacted to change in levels of economic activity and I could understand how price signals worked and how to forecast them. Today, all these price signals are compromised and I’m seriously questioning whether I have any competitive advantage left. The market is rigged and people are chasing these assets, without growth necessarily backing confidence.” Stanley Druckenmiller
Good luck with your Emini trading.