The main point of this post is a discussion on expecting the unexpected. Look at how the market reacted when the unexpected were announced.
It is a no brainer. If we can expect the unexpected, all of us will be rich. The surprise last week were
· the coordination of Central Bank actions AND
· The 50 basis point cut in China’s RRR.
What’s even more surprising is that the news came together. This resulted in an even bigger rally.
The other recent occurrence was on Oct 26th thereabout. The event were
· The EU summit announcement of the Greek haircut, bank recapitalization and EFSF
· The very favorable announcement of the Oct US GDP data
Again, the combination of two big news on a single day contributed to the HUGE rally in high yield assets, commodities, currencies and the equity ...
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