Juggling Dynamite

The 40 minute presentation Danielle gave at the MoneyShow in Vancouver last month is now available as a webinar on line.
Topic was: The US Dollar Carry Trade: Near-Term Risks for stocks and commodities
“The falling US dollar since March 2009 has made it a funding currency for aggressive risk-taking around the world. Canada has so far been a recipient of this “hot money”; but this trade can cut both ways.”
You need to login to the website with the password Moneyshow here. For quick access you can log in using username: danielle@venablepark.com and password: Moneyshow.

There is a lot of excited talk and explanation about what caused the sudden plunge in world markets yesterday afternoon. I have heard several reports now assuring people that the sell-off was an input error and “all a big misunderstanding.” Make no mistake, world markets are selling off heavily for many good reasons.
It may well be that there was a technical problem around 2:30pm yesterday that triggered a sudden drop, but markets were selling off heavily well before that happened and have been breaking down technically for the past several months. Do NOT listen to the long always robots out there assuring everyone that the correction is over and it was all a big mistake: “nothing to look at here folks, move along, move along.” Sure.
World asset prices have been heavily over-valued for the past 6 months and have become wildly disconnected from the realistic growth profile of the global economy over the next year and possibly further. The next phase of the on-going credit crisis is rightly taking world attention at the moment and it is called Sovereign debt. It is much bigger than the US banking crisis that rocked the world in 2008 and it will be hard for any risk assets to decouple from this re-pricing phase. (The US dollar and long bonds have broken out though as the risk trades come in for shelter.) Expect these issues to persist for months not days. Restrict your risk accordingly.

This video of audio recordings taken in the final talks last December offers some bird’s-eye insight into the conflicting perspectives on responsibility as between developed and developing nations.
Notice no one is arguing that carbon emissions are not a pressing issue, it’s just the poorer countries say westerners created 80% of the emissions and so the burden falls mostly on us to assume the cuts. Hard to argue with the logic really. We got rich abusing the planet, (well and then poor again by abusing credit) but so far our standard of living is still much higher than the masses in developing countries. Many of them are not eating enough. Most of us are eating way too much, never mind all the other “stuff” in our garage.