Planet Wealth

Thanksgiving normally gives a very boring, low volume type of trade.  On Wednesday morning, it started just that way.  The market was drifting higher in early trade, with bond yields drifting higher as well.  In the early afternoon however, bondy yields plummeted.  If that was domestic trade, the US markets would have normally sold off but they didn't.  That meant it was foreign money pouring into bonds, so I set out to try and find out what was going on.  Yes, the news regarding Dubai World, the developmental engine of Dubai, had asked creditors for a six month freeze in debt payments actually broke on Wednesday.  It barely went noticed in our trade, however when the foreign markets opened on our Thanksgiving Thursday they tanked.  Why?  Because most of that debt is owned by Eurozone banks and suddenly there was risk of default of billions of dollars.  Abu Dhabi has long been funding Dubai World, however they seemed to finally draw the line in all of DW's massive spending.  Most everyone believes that Abu Dhabi will not let DW default on the debt payments, but it created uncertainty and markets hate uncertainty.  Now our markets seemed spooked and at one time prior to our open on Friday, the Dow was down over 300 points.  Anything could have happened on a low volume half day trade Friday, but the markets spent most of the trade recovering from the lower open.  It is interesting how the markets never seem to make a massive move on a holiday trade.  It's almost like some kind of code that major moves won't happen when the majority of traders are on vacation.  "We just need to wait a few days and see how things shake out" was the common theme Friday.

It was very curious on Wednesday, that with a US Dollar dropping big, the markets weren't up huge.  Again, strange holiday trade.  Everyone is waiting to see how the markets will react on Monday.  The Foreign markets recovered a good part of their respective drops, but the question is "How much uncertainty remains?"  As I write this, the US Dollar is down again and the futures are up.  We will see how that holds up once the foreign markets open leading in to our open later in the morning.  For those of you that have been waiting for new positions, now you know why we haven't added any.  It felt as though something was going to happen on Monday, it just occurred one trading day early.  Rest assured, new positions will be added soon and the trade early in the week will help determine as to what direction those trades will be.