04/22/2007 - G7 - all sizzle no steak |
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* G7 - all sizzle no steak
* China GDP shocks the world
* Risky assets get the green light
* Dow Jones flexes its muscle
Not to beat a dead horse, but the G-7 meeting last weekend was the highlight that provided no highlights. In this new era of low volatility, put on as much risk as possible and then fund it as cheaply as possible, even a meeting of the top government financial experts provided nothing that the markets could sink their teeth into. And maybe in the final analysis, it is that very fact that provides the most insight. For if the G-7 had communicated that it would be intolerant of Euro strength above a certain level versus the yen, the market would fixate on that price and force the hand of the various central bankers. For those traders around during the 1980's, it was the bank of England who rudely discovered that if you draw a line in the sand, one that you are prepared to defend, you (the central banker) are artificially defining a currency rate that does not meet fundamental analysis. Markets are both efficient and inefficient, but always prone to debate what a central bank should and should not do. Are the finance ministers learning from past mistakes? We will leave that supposition up to the faithful. Full text »
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