To maxpi: I must agree with milktruck on this. It's not because we're addicted to negativity. We have no control of this, and we just trade what we were given. We are just small accounts, we can't move stuff. The one that has the printing press move stuff, buying eminis to prop up the market, etc. To a degree, I think this quant-driven market is pricing in US dollar devaluation so foreigners can buy our export on the cheap. At the same time, Ben Bernanke is printing more trillions of funny money. Better panic now than later... Exit door's gonna be jammed it happens literally overrnight (see Argentina). There is no shortage of liquidity when you crank up the printing press. The world is basked in liquidity. But there will be shortage of natural resources, that I'm pretty sure. Well, either way it's gonna end bad for the currency - the US dollar. But I suspect they want to protect the 401k while sacrificing the currency. I see no other alternative. Also, dollar devaluation will make domestic investment more attractive. Warren Buffett, Jim Rogers, Soros, Nassim Taleb, Peter Schiff have all prepared for this if you do some digging. And yes, I'm aware of Prechter's US dollar bottom call. I think his clients are gonna lose money big time. There's too many US dollar bottom calls. No fundamental to support the rise either. More deleveraging? That's funny - Ben can just crank up the printing press when the banks need more money. At the end of the day, those holding on tight waiting for the US dollar to do a little dead cat bounce will suffer.
JPY could be crashed to save USD. Just look at Nikkei are ready to explode to upside. While Japan had many zombie banks before, yet JPY has rallied from 240 to 85 in early 80s and 90s, USD could do the same thing here, as long as there is a counter-party "willingly" accept such risk. I saw Korean Kwon and JPY are potential candidate for such trade. Yeah, I shorted yen and long Nikkei. Just my 2 cents. not a recommendation.
I think long term dollar trend will be down for the record, and the next leg down in equitiies is where I will be going all in on EWA, EWZ, PIN, MOO, DBC, CGW etc. However I forsee a hell of a dead cat bounce at some point in the next, say, 9 months. That not a precise call because i havent thought it all through yet, but here is one piece of evidence: From http://globaleconomicanalysis.blogspot.com/2009/08/prechter-sees-major-deflationary.html "According to Prechter, the Elliott Wave pattern in the US dollar confirms we recently hit the fifth wave down. Next stop is up. He also notes that sentiment has reached an extreme: "The Dollar Sentiment Index for the Dollar Index reports just 3% bulls among traders, an extreme level only five times in the past 20 years, usually near an important low," Prechter wrote on Aug. 5. "The last time we saw readings like this was March-July 2008, just before the dollar soared." In other words, the "short the dollar" trade is overly crowded." Its a zero sum game, folks. How much money can the 97% take from the 3%? thats the opposite of how trading works out.
It seems the smart money, Soros, Rogers, and ilk, are all on the side of a weak dollar. They are short the dollar-- but they didn't tell us what's in the denominator -- and short bonds as interest rates will have to rise. But there will be squeezes of course and these things take a long time to play out; so weak, impatient hands should not play this game. It is pretty clear that a weak dollar is essential to improve our trade balance and boost domestic industry, and that will also make US assets cheaper so you can expect a spate of foreign companies coming in and buying up assets, especially since this is a primary way for them to protect against us cheating them on bond returns. A major problem Bernanke and Treasury have is the balance between currency strength relative to currencies of our trading partners and interest rates. One thinks of a weak dollar (easy money) and low interest rates going hand and hand, and that can be true domestically -- we have that now, for example. Unfortunately, in the long run, for a debtor nation a weak currency and low interest rates are mutually exclusive, and that's the dichotomy that Bernanke and Company are faced with. Just how much longer will our creditors put up with us? Surely interest rates will have to rise at some point and a balance will be struck between rates and monetization. In the end, we will have no choice but to monetize a substantial portion of the debt as it will be simply impossible to improve productivity enough to service the debt without monetization. There are two actions on the fiscal side that would help immensely, and that would be to bring medical care costs in line with those in other nations, and the other would be to do the same with military expenditures. These are nearly impossible tasks given the control lobbyists have over the US Senate, and the relative disinterest among the less educated, but vast, segment of the US voting population -- they want lower medical cost without changing anything "too much", and they want a strong defense. Well Bernanke is coming up for reappointment soon and I expect him to be reappointed. And i'll be glad of that, because so far as i know he has never worked for Goldman Sachs.
Hugh Hendry likes bonds, and I like Hugh Hendry except I dont know if I just enjoy watching his on air takedowns of tv personalities and tool bank analysts talking markets. Seems to be a smart guy.
You keep doing that and let me know how your account looks next year. I think you'll be surprised. Remember, when fear and panic come back to the market, money will pile into treasuries no matter how much printing is going on. The US$ is still the reserve currency and the world's super power. Those that control the larger agenda have a "best case scenario" with the US and its population, economically and via the military. Who would ruin that working home-base scenario and move shop? Where are you going to get a "free democratic" population to fight for you when the flag waving starts up again. Think about it.
Weak dollar/long all else is picking up nickels in front of a steam roller that is eventually going to get crushed by a larger steam roller coming the other direction driven by the government. Timing is everything.
Remember how everyone is saying commercial real estate is in trouble? Well not anymore. I absolutely guarantee Ben Bernanke will bail them out with another program. This is an easy trade. His next move is already written in my book. I'm buying the dip tomorrow like crazy ... and long other currencies vs dollar. As long as he's the chairman, it's the easiest trade, ever.
Futes down, Asia down. More buying opportunity as Bernanke our Zimbabwe overlord prints more money. Guaranteed he won't raise interest rate. If he does that, the economy will be crippled. Obama won't allow him. Easy money.