Thursday …Crazy markets but Calbuco signals bear market coming.
- Have I lost my marbles or just given up. Well equities have suffered a bout of very bad data from China, Europe and the US but still risk appetite is there.
- PMI numbers show nowhere really is growth doing anything than showing signs of slowing but that old carrot , ‘ more stimulus ‘ seems to give the necessary fix to the junkies.
- However, beware those strange signals that can emerge. Chilean Volcano Calbuco may just have given us a sign its all about to end. Yes the last time this erupted in 1972 we saw the end of a bull market and the 1973 and 1974 bear markets followed.
- I do seriously wonder how long its goes on as the Nasdaq and S & P make new highs and the Shanghai exchange fires itself ever upwards. Who knows what the real catalyst might be ? Grexit, China we just don’t know. What we do know is that with China now securitizing bank loans at rapid speed there are more seeds of disaster being sown.
- Greece remains unsolved and odds of a Grexit or Graxident ( some event that sees Greece become insolvent) are even money odds to me. If it happens then EUR/JPY may be the best play testing 120 while likewise a settlement could see that pair back at 140
In the world of forex we are down and up and up and down. At the moment ,EUR/USD 1.0890 suggests to me we could still go higher and the clear out of USD longs is still in progress. GBP/USD at 1.5135 is once again ignoring political issues and long term I still target 1.40.
I shall continue to buy into USD weakness from here on.