Aside from the fact that this morning’s dismal confidence data likely inspired more Fed-inspiration, the fact of the matter is that US equities remain beholden to the ebb and flow of JPY-carry trades. This morning’s surge in the latter (EURJPY) can be attributed to ECB’s Nowotny, who dropped this little tape-bomb earlier:
- *ECB’S NOWOTNY SAYS ‘NO REALISTIC PROSPECT’ OF RATE CUT: MNI
- *NOWOTNY SAYS ECB UNLIKELY TO CUT BENCHMARK OR DEPOSIT RATE: MNI
- *NOWOTNY SAYS POLICY MAKERS ‘HAVE TO LIVE WITH’ STRONG EURO: MNI
Which strengthened the EUR (against the JPY) and thus – in the new normal interconnected world (disconnected from fundamentals) – US equities spike.
At some point we assume reality will dawn that carry trades can’t carry us all the way to inifinity but for now, that seems to be the case at the margin – and the margin is all that matters…
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/wVxFvoGa4Qg/story01.htm Tyler Durden