Sunday, April 15, 2007

Major Storm hits the east coast...

So today a major storm is due to hit the Eastern Coast. The news stations are warning people to take in what is likely to get swept away in the wind storm. As I write this the rain is steady, but no wind or "down pour". So are the weather forecasters being overly cautious? Or is this good advise? To me it seems like good advise. Why take unnecessary risks. The few minutes it take to bring in a table and chairs off your deck is well worth the piece of mind that is you get, if (when) the winds pick up. I remember many years ago vacationing down on the New Jersey shore. A major hurricane was predicted to hit the coast(the first one I remember). My mother packed us up (myself and my three brothers) and moved us inland to wait out the storm at a friends house. Well actually we only moved two blocks inland, still on the water, but the intent was there. Looking back she was just being overly cautious, but I think that is better then waiting till it is to late to react.

Similarly you should look ahead when you are trading. Take the current market as an example. For regular readers you know that I have had similar trades on for months. Long Emerging Market currencies, long the Euro and short rates in Mexico, Brazil and Argentina. These positions, for the most part, have proved to be profitable. But is there something out there which is warning of a problem in the future. Stagflation, I think this is a real risk to the economy. In my opinion oil prices are here to stay, and will grind higher in the years to come. India, China and other EM countries are constantly increasing the level of consummation and this trend looks like it will only increase in the future. The U.S. Economy is certainly a mixed bag at the moment. Employment numbers look strong, Inflation numbers look high, but all other indicators seem to be on the decline. Not a good situation. I am maintaining my postions, But an going to be on the alert for a sea change. I also will not add to position for the time being.

Good Luck and Good Forex Trading.



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