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(snip)Fighting words today from Mark Lapolla, global investment strategist of the firm Knight Capital. For those that don’t know, Knight Capital executes more trades than any other U.S. firm. Lapolla said that a breakdown in the equitable terms of global trade, with specific emphasis on China, will essentially end the global growth story. At the heart of Lapolla’s assessment is his view, and a view that I share, that the world is essentially done playing fair with each other. Economic, government, security and resources as a result are all in a fragile state. I think we’ve all seen the evidence of that in recent weeks which has escalated since the Federal Reserve's QE2 announcement and with the spiralling debt issues in Europe.
The core of his argument is simple: the world is done playing fair with each other. Government policy, economic security and resources, the tenets of global trade, are all in a fragile state.
As reported on by CNBC, Lapolla stated in a memo to clients:
“The game is over…We expect a shockingly powerful rally in the dollar, broad-based weakness across the commodity sector, a dramatic widening of emerging market credit spreads, and what could prove to be a stampede of hot fund flows out of the emerging markets.”
“We believe the data and government actions out of China, the back-up in U.S. interest rates, the Fed’s emphatic commitment to QE2, intensifying pressures across the EU, broadly rising commodity prices, government efforts to control hot money flows, have finally pushed the global terms of trade to their tipping point,”
“We appreciate both the gravity and the brevity of this note; but then again, the story is simple.”(snip)



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