Wednesday, December 4, 2013

Playing Another Hand of Existential Poker

"Do the times make the man - or does the man make the times?" 
If we're reading the rules right, at this point in this existential zero sum game of disinflation, deflation and reflation - both Xi's manifesto and Bernanke and Yellen's taper talk - trump Shinzo's Abenomics. 

For those not following at home: 
  • The dollar has historically declined when the Fed moves to constrict extraordinary monetary policies.
  • Japan has tangentially expedited disinflationary trends overseas in the past year through a weakened yen. We expect that trend to reverse.  
  • China is breaking out of its long-term consolidating range. World-wide growth should accelerate, as well as broader reflationary trends. 
  • Commodities, commodity currencies and emerging markets should benefit disproportionately from China's reemergence. 
Generally speaking, while we recognize the significance of having a commanding face to the story,  we're more in the, "Times make the man" camp. With that said, we're happy to report our better halves will soon be represented at the monetary pulpit, but will also likely receive both unwarranted praise and criticism. 

Hopefully for Dr. Yellen she receives the Volcker treatment.