US Job Data

US job data released by labour department beat earlier forecast by experts of 60,000 jobs being added versus fresh data depicting that jobs that added infact are 90,000. This data can make US federal reserve pause in it's rate cut spree. It's very essential for US central banker to hold it's rates so that dollar can be hold steady against Euro, Yen, Canadian Dollar. If he cuts the rates then it might again unleash huge liquidity to riskier assets, which alredy are extreme inflated levels. Also central banks of US and European countries should slow down the level of printing their currency if they want to have financial markets in healthy shape and avoid bursting of equity and commodity bubble in an abrupt manner.

Asset Inflation

Due to continous money supply by central banks across major economies, asset prices have reached a point where it looks scary to justify this hightened exhuberance among so called value investors. This continous and extremely fast rise in asset prices is creating an asset bubble, which no body wants to burst, but still fears. The common casualty is layman person, or what economist love to term as Consumer, which bears the brunt of this artificial asset inflation and gets credit at high interest rates to buy that asset! This can't go on for ever, something might topple this top heavy giant from the cliff, what would that be, only time will tell.

Case For Renewed Yen Carry Trade To Resume

After japanese central bank refused to increase the interest rates and with yen strenghtening against the dollar and risk perception of japanese investor/saver on an increase due to lack of investment oppurtunities in their own country, yen carry trade will begin to find favour among large investment banks and hedge funds. This will further give a boost to already over heated stock markets like India and other fast growing asian economies.

Falling Dollar Is Creating Asset Inflation

After US Fed had cut interest rates by 50 basis points, dollar has been falling steadly against major currencies. This will further lead to rise in other assets like commodities, stocks. Again for the past few trading sessions, gold, copper, zinc, lead, agri commodities and crude oil are rising and are at their all time highs. Stocks across the globe are rallying for the past few days. Dollar investors are pulling their money and pouring it into these assets. This is creating inflation in stocks, commodities and thus central bankers job is now much more difficult to manage inflation. This hightened levels of asset inflation does not agour well for growth and interest rates. Investors have a tough time managing their portfolio as volatility will rise along with hightened greed of market participants.

Crude Is Boiling

Crude oil prices have surpassed important technical level of U.S.$77.50 per barrel mark today and is a cause for concern as it will along with rising food prices can give further boost to inflation, which has become central point for many central bankers across the world. Growth has not been dominating central banks monetary policy of late as excess liquidity is amply supplying credit to fuel growth, but rather asset inflation, especially food and fuel prices are grabbing their monetary stance.
U.S. markets are feeling pain after subprime mortgage mess and continue to suffer investor apathy. Asian markets are showing great resilience and are very close to their all time heighs.

Real Estate

Almost every asset class has seen sharp correction over the past few weeks, be it stocks, commodities, currency like the dollar, even Art has seen some softening in resale prices, but real estate prices have so far remained over heated in most commercial parts of the world. Even residential property rates in the emerging markets like India, China, Taiwan are over heated. Continued over heated prices is a cause of concern for business as well as genuine home seekers.
Huge money flows have gone into real estate segment, be it PE funds, massive loans from financial institutions and banks to builders and home buyers, black money has also flown with great intensity in to this area. Rentals are also ruling high making the business operations and other commercial activity less profitable or even viable to run. This has caused inflationary pressures in the final product prices. This real estate segment has to undergo a major price correction in order to restore affordability and investment viable proposition.

Japanese Central Bank Keeps Rates Unchanged

Today japanese central bank kept the interest rate unchanged at 0.5%. That's good news from yen carry trade perspective. Yen is trading at 116.27 against the U.S.Dollar and thus fear of dollar falling further against the yen is well contained at the moment. Equities are consolidating across the world after sharp sell off, commodities like copper, alumunium, lead, nickel, zinc, crude oil are also cooling. This is good news from inflation perspective but also raises the concerns about slowing economic growth in the developed world.

Investor Confidence Is Shaken

By looking at stock market behaviour for the past 3 days gives indication that investors/traders confidence has been shaken and they are using any rally in the markets to lighten their stock commitments. Cracks in the credit markets and subsequent pouring of around U.S.$550 Billion in the financial system by various central banks only indicates the intensity of underlying unresolved problem.
This is causing huge nervousness among investor/trader class who may not want to enter the markets unless and untill some assurance that problems with subprime mess has been contained.
This world runs on credit, so if that gets affected badly then we have a serious problem in our hands and smart market players knows this. Good luck with our investments.