Couldn't disagree more. Markets don't trade the facts now. Prices reflect maybes to come. All the time. markets are forward looking.
Now is a falling dollar, rising equities and a record nominal gold price. That is what I see. I am TOTALLY ... and ABSOLUTELY unconcerned whether inflation actually manifests as a reality in our economy. I am focused on what the money is willing to chase ... to bid up. These are the facts now. The forward looking tendency of markets is conjecture. Now is the trend (if there is one) as evidenced by recent prints.
It seems optional misunderstood. By now you meant, didn't you, the market now. He apparently thought you meant the state of the economy now.
Yes ... that is what happened. Does anyone really know what the state of the economy is now? I think the fact that so very much of it is dependent on government support makes it weak. Cash for clunkers ... and now car sales are back down. They tell me the housing market is better but what about the $8,000 subsidy. The now that matters is the markets. As hard as they may be to follow they are infinitely easier than than doping out this heavily subsidized economy.
This is what you get when you convert to a service economy whose performance is ultimately affected and mesured by sales of durable goods produced somewhere else. This model is DEAD, or it should die soon unless USA wants to commit suicide.
This is an extremely important indicator. Take a look at the unemployment rate through every major US bear market and you'll see that it peaks almost exactly when the market bottoms. 1932, 1982 and late 2002 are no exceptions. 2009 is!
Good point, Swan Noir. . .. I'm confused. Jim is bearish on the dollar. On the contrary, Marc Faber seems to be short-term bullish on the dollar, he keeps saying it's become oversold, and is due for a correction of up to 10% against major currencies. I always listen to what Faber says very carefully, but the market action HERE AND NOW is not showing any signs reversal for EUR/USD, the overall tone for EUR/USD is bullish. Who knows maybe that's about to change. BUT as things stand NOW, the right thing to do seems to be long EUR/USD, if you're trading it .. . Although it's caution, caution, caution . .. As always . .. Who knows what can happen tomorrow!!! Some further thoughts on this: http://marcfaberblog.blogspot.com http://forex-hunter.blogspot.com
It seems reasonable to me that you could be both bearish on the dollar in the long run but bullish in the short run. It is rare for anything to go straight up or down without a significant correction at some point because whenever there is a large move there is nearly always an overreaction -- so perhaps the dollar is becoming oversold. Certainly there will be interventions if things get too far out of whack. Overriding all of this, it seems to me, is the need for the US to service its debt; not an easy task in a recession. Complicating matters is the problem with Social Security. The trust fund will very shortly need to start redeeming the government I.O.U.s and there will no longer be a surplus to dip into. This means, of course, that there will be even more pressure on the dollar. Correcting the trade imbalance will be a huge help, but you and I both know that the debt will be monetized.
Right, but most people are bearish on the dollar even in the short term, I think. Jim gave an interview on Reuters the other day, where he also said that he didn't see any signs that the dollar would be strengthening, even in the short term. But Faber has been saying, for a couple of months now, that the USD is oversold, and Euro overbought. Clearly, he has a good feel for the markets, plus he knows what large institutional players may be up to. And he's often right. But so far it's not materializing, maybe it's around the corner, who knows . . . Faber thinks the dollar could gain up to 10% in a corrective move . . . In any event, the dollar's strongest relationship for now is with the S&P. S&P goes up - dollar goes down. S&P goes down - dollar goes up.