Archive - Feb 4, 2010

RANsquawk 4th February Morning Briefing - Stocks, Bonds, FX etc.

Zero Hedge embraces contrarian analysis. But its readers tend to be exaggeratedly and stubbornly critical of any opinion contrarian to the "ZH consensus". One of the most fallacious application of this proclivity is the never-ending attacks on TBTF banks, and the blame put on them for causing the current financial mess. We disagree with this myopic train of thought. Although banks have their share of criminality to pursue and prosecute, is the main blame argument posed against them merely the age-old straw man fallacy manifest?

Are exogenous events on the real economy about to bring a round 2 of the eurodollar short squeeze, and will the newly-instituted USD-funded carry trade amplify the effects of the unwind?

5.7% GDP growth for Q4 2009 is a phantom. Understand that a normal part of the business cycle is to replenish shelves when retailers realize that 90% (or 84%, depending on what you believe) of Americans are working and buy some stuff. But the fundamentals are still bad. It's just the foam off the stimulus brew.

James Bullard,president of the Federal Reserve Bank of St Louis, told the FT that the US has escaped the danger of a Japanese-style deflationary trap. He may be right, for now...