Do Five 'C's Equal A Crash?

London, UK - 16th December 2011, 15:50 GMT

Dear ATCA Open & Philanthropia Friends

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

1. The first 'C' is for Christmas time and the trading volumes are already getting thin, as they often do, at this time of the year;

2. The second 'C' is for Capital flows which are increasingly leaving illiquid and riskier asset classes like peripheral sovereign debt and currencies like the euro and heading towards perceived safer cash havens like the US dollar, Japanese yen, Swiss franc and UK sterling;

3. The third 'C' is for Currency exchange and as the number of dollars available as a transit lounge currency diminishes, the exchanged currency like the euro is falling further faster;

4. The fourth 'C' is for commodities and since the rising dollar is at present inversely correlated with all commodities, the more it rises, the more they all fall including oil and gold; and

5. The fifth 'C' is for China, which is experiencing a rapid slow down and that is undermining confidence amongst the Chinese business and investor community in regard to:

a. Competitiveness;
b. Self-evident bubbles; and
c. Capacity to honour obligations.

Is a crash inevitable?

Confidence

The juxtaposition of the five 'C's demonstrates a swift erosion of confidence around the world across most asset classes except the US dollar. Even the remaining confidence in the global financial markets in regard to the European leaders' capacity to solve the Eurozone crisis is evaporating completely in the aftermath of the much vaunted summit which delivered little of any substance. ATCA 5000 had already warned that this would be the case.

Conclusion

Is the synchronicity of the five 'C's, that is undermining confidence, likely to lead to a crash?

[STOPS]

What are your thoughts, observations and views? We are hosting an Expert roundtable on this issue at ATCA 24/7 on Yammer.

[ENDS]

Expert Roundtables

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Best wishes