The Problem With Competing Views….

Tyler Durden's picture

Submitted By Yves Lamoureux of Blackmont Capital

US dollar bears should take notice of the great correlation between global liquidity annual change rate and the dollar index.

We view this big drop as a positive development for the dollar.

It is tempting to get on board with talk of the greenback going into freefall. However if taking a look at the graph one can reflect as to the big picture in the making perhaps then you can arrive at a different set of conclusions.

We stand in the deflation camp and have been accumulating long term Treasuries since June .Our behavior is very similar to primary dealers.

The problem with competing views is that the bond market looks out to
the medium and long term horizon while stocks today are mostly
concerned with the day to day fluctuations.If you were confused , you
were not alone. Investors needing to be protected are pushing managers
and advisers to invest at all costs if not beware. The fast move up in
equities makes you react the same way as when a drop occurs. You behave
out of fear. There is no doubt that a bull market of regrets will ensue.

And for an indication of what happens when you see a fear and confusion driven melt up such as the one we are experiencing in equity markets now, compare these two charts:


Yves Lamoureux, Investment Advisor, Blackmont Capital inc

The opinions contained in this report are those of the author and are not necessarily those of Blackmont Capital Inc. Every effort has been made to ensure that the contents of this document have been compiled or derived from sources believed to be reliable and contains information and opinions which are accurate and complete. However, neither the author nor BCI makes any representation or warranty, expressed or implied, in respect thereof, or takes any responsibility for any errors or omissions which may be contained herein or accepts any liability whatsoever for any loss arising from any use of or reliance on this report or its contents. BCI is an independently owned subsidiary of CI Financial. CI Financial is a Canadian owned diversified wealth management firm, publicly traded on the TSX under the symbol CIX. Blackmont Capital Inc. is a member of CIPF and IIROC.

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NoBull1994's picture

My view is that Bob Pisani is a complete homo and that Maria Bartiromo has had one too many liquor drinks and/or cigarettes in her career.  Any competing views?

E Thomas St.'s picture

It's insulting to group Pisani with gay people. Gay people are way less harmful than Bob.

Hephasteus's picture

My view is that if you pull back really hard on the yoke with a  low powered airplane you'll go up really really fast and then stall. If you just wait for everyone to die off that remembers this you can load the plane up with people who will go weee!! Everytime.

Stink_Pickle's picture

Close--if you pull back really hard on the yoke then your wings will stall, but you will not go up at all.

Anonymous's picture

but , what about the chinese put?????

AR's picture

The above chart (entitled: Global Liquidity) does pose an interesting correlation between global liquidity and the dollar's rate of change.  Does anyone else have an opinion or experience with this? The recent "carry trade" (selling of dollars and long almost every other asset class) has profound unwind implications if the dollar reverses -- a trade which absolutely no one expects to occur.  The trade that would hurt the most investors, would be the bearish dollar "unwinding."  And...the Fed or Treasury could orchestrate a swift dollar reversal like that with one simple overnight comment (like, "...we think the dollar is to low and with our counter parties will begin supporting it..."). 

. . .'s picture

If the Fed is sitting on foreign currency, and pulled its swap lines with foreign central banks, that might support the dollar.

KeyserSöze's picture

swap lines put in place in Feb of this year expire Oct 31st...

. . .'s picture

The swap lines can convert to loans after Oct 31st.

Anonymous's picture

The party's over at Dow 10000 pass it on.
The party's over at Dow 11000 pass it on.
The party's over at Dow 12000 pass it on.
The party's over at Dow
The party's over.

Anonymous's picture

let's dance now

Gordon_Gekko's picture

Have you ever noticed how docilely we accept any and every "data"/chart that happens upon the web; especially those that have some kind of official/government stamp on them. Seriously guys - you may think I am paranoid, but Fed providing the monetary base/money supply data is like the fox guarding the henhouse. Unless there is a complete audit of the Fed I really cannot be sure that anything they say is true.

reading's picture

No offense, but we don't "think" you're paranoid...we know you are!  However, it appears your paranoia might be well warranted at this point.

Anonymous's picture

But, is "well-warranted paranoia" an oxymoron?

defender's picture

"Just because you are paranoid doesn't mean that they aren't out to get you"

Stink_Pickle's picture

GG--I agree.  How about some financial math?

Ben Bernanke = John Law

Anonymous's picture

pretcher says we are at multi-year lows for the dollar. 'nuff said.

TwoJacks's picture

...and when Prechter points out a multi-year low, you can bet your ass it's going lower

logistics's picture
logistics (not verified) Sep 16, 2009 5:36 PM

Second. Although I've emailed those brainless morans (CA) about this several times and have a growing number of form emails in my inbox. Your message is much less profane than mine

putbuyer's picture

"fear and confusion driven melt up"

This says it all. What an extraordinary statement.

They will crack up, then they will crack down.

Anonymous's picture

would be great if someone could establish a
fund where you click and donate, and have a web counter thing that rings up the amounts as it grows and have it go viral across the bloggisphere/internet, with it's mission openly designed to donate to anyone running against those senators that do not join the 1207 effort. Have it linked to all the important bloggers, talk radio, Beck etc.. let the senators sweat it out as they see the amount grow larger and larger. Like a giant Jerry Lewis telephone except this time we are collectively trying to save our country.

Anonymous's picture

divide it up equally for every single opponent who gets on the ballot and we're in.

would be a nice experiment in the public financing of campaigns.

ring me up Jerry!

Humble Gentleman's picture

They can compete all they want -- it is almost certain this isn't going to end well, for anybody.

crzyhun's picture

Late to the, the IMF how much are they to be trusted with data. Second, what is the definition of 'global liquidity?' Third, good thought provoking chart, but there are points where there just wasn't great correlation. Finally, even if 1omm people were bearish on the dollar, and CB were not, who wins? CB and their ilk have this in their hands. We watch and wait..... 

Anonymous's picture

re:"S&P 20% above 200 sma; first time since 5-1983"

True, but 5-1983 was an excellent time to buy stocks.