I just went to yahoo to look at a chart of the SMH so I can see where it ended up, but instead of typing in SMH I typed in semi. This is the chart that came up!! ouch. Wish I was short that one.
Anway, the themes of the week are a weak dollar and very strong global equity markets. I get the feeling the US is more or less piggy backing on the ROW momentum. The DOW was the real winnter in the US markets. Small and midcaps are starting to lag. Could this be the begining of the small big cap leadership change? Call me skeptical.
The continued dollar slide does not seem to be of any concern to anyone.
Brad Sester at www.rgemonitor.com has noted that over the last couple of months the US CA deficit is being financed by the official sector. Read- Asia CB's, EM CB's, oil exporters. A lot of the private sector money is being funneled out of the US and into EM's because the the returns are better and who wants treasuries at 4.7 percent when inflation is running close to 3.5 percent a year!!!
Its all about keeping a global "system" in place, that at the moment is still keeping all the actors happy. However, the dems are turning up there rhetoric against China.
Is there a point when CB's realize that they are the only ones involved with US debt and start to head for the exits before everyone else? Who knows? The dollar could fall to 65 before the finally start to crack. I don't think China has a clue what its doing or how it is growing its economy. Communism and capitalism are two very different animals.
Bonds continue to act to be in a catatonic state. Volume is not great and all the alpha is gone from the market. Alpha is the liquidity of the market. No one can make a move as long as Asia sits around with a boatload of laughably overvalued financial obligations.
We'll see what next week brings.
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