Europe, through the looking glass

October 11, 2011


I’m reading “Alice through the looking glass” to my kids at the moment but I think I might have fallen through the mirror if the last 24 hours trade is anything to go by.

I’m sure you’ll have heard that the big moves higher in equities, commodities and the Australian dollar were on the back of a European bank recapitalization plan.

In fact the moves took their catalyst from German Chancellor Merkel and French President Sarkozy announcement of their plan to release a plan. Not in 2 weeks ad planned but in 3 weeks now.

Yesterday’s piece on the AUD was just wrong. I’d figured that by 9am when I reread the piece and reflected on what I had written. But this is not a trading blog so I left it knowing I would do my mea culpa this morning.

But not for a minute did I think it would run up and slightly through parity again so soon on the back of the plan for a plan.

I’m definitely through the mirror now.

But having said that having git so bearish last week and having priced in armageddon which never came markets were, indeed still maybe, prone to an upside move.

As I wrote last week growth globally is weak but not as weak as expected fueling the recovery in risk assets. Such is the upside down and back the front nature of markets.

Perhaps the right literary reference is not Alice but Enid Brighton’s Moonface in Topsy Turvy land. When good news is no news or news there’l be news you know things are sure to be volatile.


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