Is Seven a Lucky Number? - A Short Comment

The G-7, the world's seven largest economies, are meeting this weekend in one of the world's smallest economies - Istanbul, Turkey.

It is scheduled as a routine meeting, I think. However, it may be far from routine or the usual cozy banality.

The reason - the dollar.

It appears that Trichet of the European Central Bank, and others, are not happy about the dollar's slide vis a vis other currencies, particularly Mr. Trichet's beloved Euro. Supposedly the talk will be how to stop the dollar's rotting price. Speculation is that this time, the meeting will not end in the usual warm and fuzzy assertion that everything is fine. with the G-7 leaders departing in a warm Berlusconi hug.

Or so this is the rumor.

Three alternatives can happen from this meeting. The first, and what some traders think the most unlikely, is that nothing changed and everyone had a nice vacation gossiping. The other is that they decamp Istanbul Monday, with no communique issued. The third is that they express  undying unity in supporting the US dollar come hell or high water.

If they decamp without saying anything, Guido suspects the dollar will fall Monday. Perhaps this could tip the world into a currency crisis. If they express a communication of unity in support of the dollar, my guess is that gold will fall and the dollar rally. The time span of the rally would really depend on how sincere these leaders would be in supporting the US dollar.

Perhaps the main purpose of the meeting could be a request from Bernanke to rescue a bankrupt Federal Reserve < see the Sept 23 article Bernanke's Snow Tiger on this website. > But this is Guido guessing. The meeting could be for any reason.

The important thing to remember is that over the last 100 years, important world mega policy decisions have been made over weekends, when everyone is sleeping.

Heads up. Watch tomorrow's currency markets. For that matter watch all financial markets < notice the fall in T bonds today? >.  There is still time to prepare and / or hedge.

"The backbone of surprise is fusing speed with secrecy." - Von Clausewitz

< As always, this article is for information purposes only. It is not investment advice, or in any other way a recommendation. >