Enzio's Clock

On 29th November we wrote about the far-reaching impacts of Dubai.  We postulated that there would be ripple effects, and one of these curiously has been the problems that Greece is encountering.  Unless the Germans become to Greece what Abu Dhabi has become to Dubai, and what the US government has become to Government Sachs (unlikely), watch for more sovereign defaults.

This implies that the risk at the long end of the yield curve has to rise. And if it rises, this means higher volatility.

Higher bond market volatility has to translate into stronger stock market volatility, as in a higher VIX index.  

All of which means that carry trades keep getting unwound and the dollar keeps rising.