. May 13, 2006 SouthAmerica: I feel sorry for Ben Bernanke â he inherited an economic mess from Alan Greenspan. In my opinion, now that he reached the 5 percent Fed Funds rate he should take a break on Fed Funds rate increases for a few months (until November 2006) and give time for the dust to settle before he decides what to do next. The only problem is if the US dollar starts heading south that will force him to continue increasing the Fed Funds rate before the decline of the US dollar becomes a major international monetary crisis. It did not take long for Ben Bernanke to realize the mess that he has on his hands and I hate to be on his shoes in the coming months. If the US dollar starts heading south in a big way and becomes a major international monetary crisis â Ben Bernanke will be alone on his efforts to stop the bleeding of the US currency since today we have a âBuffoonâ playing US Treasury Secretary. In the meantime, today May 12, 2006, the dollar ended at $1.293 to the euro in New York trading. My prediction for the US dollar is looking very good by the day - before the end of 2006 will might see the US dollar trading in the range of US$ 1.40 â US$ 1.50 to the euro. *********** âWall Street unsettled by Fed languageâ The Financial Times â UK May 13, 2006 Wall Street was spooked this week by a combination of rising commodity prices and comments from the Federal Reserve that heightened fears about interest rates and inflation. Stocks in focus included Wachovia and Dell, while Archer Daniels Midland and General Motors provided some relief from the gloom. Markets were sluggish in the run-up to the meeting of the Federal Reserve's open markets committee on Wednesday. The 25 basis point rise in the Fed funds rate to 5 per cent, the 16th in succession, was widely expected but the markets were unsettled by the language used by Ben Bernanke, the Fed chairman. Traders initially did not know which way to turn after Mr Bernanke made no reference to a "pause" in monetary tightening, but instead said further rate increases "may yet be needed". Having slept on it however, investors decided to take fright. This triggered a Thursday sell-off that was the largest loss on Wall Street since January. "That's quite a typical reaction," said Arthur Hogan, chief market analyst at Jefferies & Co. "If you look back at all 16 meetings, the real reaction came the day after, and that's what we got on Thursday, and we're seeing some follow-through today [Friday]." At the close on Friday, the S&P 500 was down 1.1 per cent or 14.68 points for the day, or 2.6 per cent for the week, at 1,291.24. The Nasdaq Composite was also mauled, shedding 1.3 per cent or 28.92 points for the day at 2,243.78 â a loss of 4.2 per cent for the week. The Dow Jones Industrial Average dropped from a six-year high to lose 1 per cent, or 119.74 points, on Friday to 11,380.99, a fall of 1.7 per cent for the week. The Russell 2000 Index of small companies fared even worse, losing 5 per cent for the week. Wachovia disappointed investors after it announced it would buy Californian lender Golden West for $25.5bn, a price many investors felt was too high at a time when the lending industry was slowing. Wachovia fell 7.9 per cent to $54.67 for the week, and Golden West rose 5.2 per cent to an all-time high of $74.14. It was a particularly grim week for technology stocks, as bad news hit two titans of the sector, Dell and Cisco, which both made gloomy predictions for future business. The S&P Technology Hardware and Equipment Index dropped back to its February level, down 4.7 per cent for the week. On Tuesday, Dell said that its quarterly profits would fall short of its own forecasts, because of price cuts aimed at increasing market share and revenue. Dell, which had gained 2.7 per cent on Monday, finished the week down 6.5 per cent at $24.02, its lowest level since February 2003. Cisco followed suit the next day, reporting a rise in quarterly profit above analyst expectations. However, the networking equipment manufacturer fell 6.5 per cent to $20.34 after its fourth- quarter revenue forecast disappointed investors. Google which had returned above the $400 level, was also caught in the melee and finished the week down 5.5 per cent at $373.75. Chipmakers also suffered. The separation by Intel of its flash-memory unit â widely seen as a prelude to spinning off the business â allowed it to avoid the worst of the carnage on the Nasdaq. The stock fell just 1.2 per cent over the week. Other chip manufacturers and makers of flash memory were less lucky.Micron fell 7.3 per cent to $15.81, and Advanced Micro Devices slumped 8 per cent to $31.66. "It's not a good market for tech," said Ken Tower, chief market strategist at Cybertrader. "For two years we've had a market dominated by energy. There are very few times when energy does well and tech does well." With commodity prices pushing higher, one of the biggest gainers was Archer Daniels Midland, the largest US producer of ethanol. The stock jumped 8.4 per cent to $44.10, leaving it up 25 per cent since late April and 87 per cent since January. Autos provided another bright spot. Delphi went to court with its unions to try to renegotiate labour contracts. As optimism grew that it would avoid a strike, shares rose 35.8 per cent to $1.31. General Motors, Delphi's principal customer, also benefited, rising 12.6 per cent to $26.09, amid upgrades by Deutsche Bank and Keybanc Capital Partners. .
The real question here is: Dollar devaluation is simply a proper adjustment to the feds accommodation of the 2000 $7 trillion loss... Allowing for this adjustment is actually healthy... Since when has it paid a US citizen to hold typical bank certificates of deposit ? How healthy is it for the US to continue to shift manufacturing labor to foreign countries ? Since when is leveraging a family´s biggest asset a good idea ? ................................................................................................. Dollar down... Dollar down means more exports and less imports... More exports means more US manufacturing labor needs... Less imports means balancing the US account deficit... Incentive to save... ................................................................................................. Dollar up... More imports... Interest rates down...This is interesting...The savings are the excesses created and owned by foreign countries...not US citizens... .............................................................................................. It can be argued that a rising dollar is not healthy for US economics... .......................................................................................... Globalization means that the country that has the best costs picture regarding production wins... As long as India...China can do the job for less...they will get the business... ............................................................................................... If it takes a big drop in the dollar to restore manufacturing in the US...then it can be argued that this is a good thing... ..................................................................................................... Dollar down,,,the increase in US manufacturing...the increase in savings deposits....the creation of a strong alternative energy industry...are actually good news for the future of the US.... ............................................................................................... Dollar down... Europe will get trashed...their exports will drop dramatically....the fragile economics of India and China will respond excessively downward... .................................................................................................. And by the way...when 90% of the world´s population earns $100 to $700 per month....there is no way that oil can continue its upward trend...These people will and have to change with respect to their oil consumption..... When the average income is $4000 per month...demand is less sensitive...but since US consumers are so stretched out....the high monthly income is substantially more sensitive... Forecasts of oil prices hitting $75 and above are not sustainable...and since the US is the big oil pig...the world´s supplies are dramatically affected by US sensitivity in demand... Dollar down does not necessarily mean oil prices up... ......................................................................................... The US is headed for uncomfortable but healthy economic corrections .....When the dust settles...the bleeding of the US will have waned...
. May 16, 2006 SouthAmerica: Reply to Libertad Forget the usual reasons regarding currency ups and downs and its relationship to foreign trade, the business cycle and so on⦠When a country decides that its currency will be one of the major reserve currencies around the world â remember close to 75 percent of the US dollars ever issued are flying around the world today completely outside of the US Treasury and Federal Reserve circle of influence. Since the United States made the choice of becoming a very influential currency in world affairs when they replaced the gold standard â it is implied on that influence that the US will also act on a responsible way regarding its currency and would try to maintain the value of the US dollar as stable as possible in relation to the other major currencies of the world and the price of gold. (Gold is the other major source of monetary reserves of most countries around the world.) Otherwise the United States can cause a major international monetary crisis if we have a collapsing US dollar in world markets. The United States is inviting a crash against the US dollar when members of the US government administration follows a policy that deficits does not matter. You can fool people just for a certain period of time until they catch on regarding on what is really happening. The US dollar became a special currency because it is a reserve currency held by many countries around the world. Because of this special reserve currency status the US dollar benefits in many ways including the global pricing of oil is done in US dollars. The Bush administration â probably the most âincompetentâ US government administration in US history â or they donât understand it or they forgot that the US dollar is a reserve currency and they should not play games with government policy to further undermine the value of the US dollar. The $ 70 billion dollar tax cut that they passed a few days ago it is just the latest example of the recklessness of the Bush administration regarding monetary policy. The value of the US dollar should go down and adjust accordingly to more red ink generated by this tax cut - because this tax cut makes the US deficit spending even worse. (In my opinion, we have Idiots running economic policy in Washington today.) .
. June 3, 2006 SouthAmerica: In 2000 I predicted that by the year 2010 the world would have 3 major currencies and most countries would adopt one of them â the euro, the US dollar, and the new Asian currency. And now it seems we will have also a 4th major currency; the single currency for the oil producing nations of the Middle East. I guess the only name for the new currency that will please everyone including Shiites and Sunis is - the Shisuni. ********** REGIONAL FX HEADLINES - Saturday, June 03, 2006 âGulf Countries Mooting Common Currency By 2010â Thursday, reports revealed that the central bankers of the Gulf Cooperation Countries had agreed on the convergence criteria need to create a single currency in that region by 2010. All the 6 nations have currencies, whose value is pegged to the U.S. dollar. It might be over-enthusiasm to expect a future GCC currency to achieve the status of a global reserve currency that the U.S. dollar has attained, but those in the region believe that this might not be impossible, with the vast hydrocarbon resources of the region. The GCC countries are converging their currencies on the euro area model. However, with a common pegging to the US dollar, their work would be much more easier than the euro area, where the economies of Germany and Greece were poles apart when the common euro idea was mooted. Still, the benefits in the euro are already clear to see, with nearly everybody agreeing that creating a single currency had eliminated problems and not caused them.- RTTNews Source: http://www.middleeastforex.com/index.php?section=182 And http://www.middleeastforex.com/DesktopDefault.aspx?tabindex=1&tabid=103 .
. March 11, 2008 SouthAmerica: Just a reminder! Most of you guys laughed about my predictions â now who is having the last laugh? Oil = US$ 110 per barrel US$ 1.54 = Euro $ 1.00 Real Estate bubble has burst since then and prices have been down at least 15 to 20 percent. My prediction and timing on interest rates up and down was almost perfect. Price of gold is way up even above my predictions of $ 600 and later $ 800 per oz. ************************* December 8, 2005 SouthAmerica: Here are my predictions for the year 2006 and beyond for the US economy: 1) The US dollar should finally decline during the year 2006 at least to the range of: US$ 1.50 - US$ 1.60 equal 1 Euro. â¦After Ben Bernake, the new Fed Chairman stops raising the Fed Funds rate in 2006 - when the rate reaches the 5 percent level - The US dollar finally will start its fast decline against the Euro and other currencies. 2) The price of Gold should increase in 2006 - from the current price of $515 per oz to a new high of around $ 600 per oz. 3) The stock market should decline in the next 3 years in the range from 30 to 50 percent from current levels. (There are many reasons for that decline to become reality.) â¦4) The real estate bubble will burst in the near future when interest rates continues rising to higher levels. Housing should lose in value from 25 to 40 percent depending where the real estate is located. 5) To stabilize the US dollar decline, the US Federal Reserve will need to raise the Fed Funds rate to at least the 5 percent level by the end of 2006. As the US Federal Reserve continues increasing the Fed Funds rate, the US economy growth rate will decline accordingly; in turn helping the implosion process of the US economy. 6) Outsourcing American jobs to foreign lands will help the implosion process of the American economy. It is open season on American jobs, and millions of American jobs will continue leaving the US for cheaper labor markets. 7) This trend will continue - Companies of every size will transfer the responsibility of their pension plans to the US government. Most of the people now receiving pensions from these companies will receive a very large cut on their pension benefits when the pension responsibility is transferred to the US government: Pension Benefit Guaranty Corporation's (PBGC) These large cuts in pension income will result in a reduction in spending by pensioners, and in another important negative trend to affect the US economy in the coming years. (We are talking about millions of retired people here in the US.) â¦I am so confident about my predictions that I am putting them in writing for entire world to see it, as I did in the past. (And I did identify myself, and signed my real name) ******** The Kin: Ha, Ha, Ha. ******** Ivanovich: Entertaining read. ******** Tomcole: Funniest post in a long, long time. ******** aimless: Typical bearish prediction. Every year they foretell the upcoming decline in the economy and markets. 9 out of 10 years they are wrong, sit on the sidelines and miss opportunities to make money. Once a decade or so they're right. Then they all puff out their chests and say, "Look how smart we are." ******** Neodude: Do you have some kind of economic model, or are you pulling these numbers our of your ass? 4) The real estate bubble will burst in the near future when interest rates starts rising to higher levels. Housing should lose in value from 25 to 40 percent depending where the real estate is located. ******* davidlynch2000: This might take 15 pages for him to admit it again, so I'll help. He pulls all his numbers out of his ass. There is no quantitative basis for anything he says. He doesn't bother considering any facts that are contradictory to his world view. He is neither an economist or a historical writer... closer to a crazed evangelist. He is certainly not a trader, or at the very least, he is not trading the ideas he is promoting. Feel free to read the previous thread he started regarding his idea of who the best replacement for Alan Greenspan would be. All the confirmation of these facts will be there. ****** aPismoClam: oops. I stumbled onto the paranoid ward. ******* Nick Leeson Jr: South America, your 2005 prediction of the US dollar to Euro, it missed by a mile, or 43 cents to be exact. ******* sputdr: His prediction is based on hope of the us failing and nothing else. He can't see the big picture. ***** TrendBert: Why don't we leave predicting the future to astrologers? For most people living in the reality is already difficult enough (just witness some of the posts on this board). .
Certainly not you Newsflash, it's 2008, not 2006 and the stock market did not decline during the previous three years and Dow Jones, Nasdaq and S&P are not nearly where you said they would be. You're only off by 2 years, 5,000 Dow Jones, 1,000 Nasaq and 500 S&P points. Close enough
We may indeed get there eventually but it won't help your prediction which was for 2006, not for 2008, not for 2010.
. SouthAmerica: Reply to DDDDooooooo It is very hard to realize these predictions with so much US government intervention going on here in the United States to bailout the financial markets. If we had a free market economy here in the US, then these predictions it would have a better chance to come to past. But with massive US government intervention to bailout Wall Street â and the American financial system is supposed to be an efficient system, at least is what they preach in Wall Street until they need another major government bailout. The way things are going I would not be surprise if the coming years the United States economy needs to be bailout with loans from the IMF â just like a 3rd world country. ***** 3) The stock market should decline in the next 3 years in the range from 30 to 50 percent from current levels. (There are many reasons for that decline to become reality.) Market will trade in the following range in the next 3 years: Dow Jones from 7,300 to 5,200 Nasdaq from 1,400 to 1,000 S&P 500 from 800 to 600 .
I think it's been over a year since I last visited this board, and for some reason it notified me that there had been a response this morning. I defer to SA... You were absolutely correct about the dollar, albeit 4+ years after you made the initially made the prediction. I know the one in this thread was for 2006, but I think you'd had that one going on your personal website for a while... or maybe a more ridiculous one. I don't remember and can't be bothered to look it up. Nevertheless, I think it is probably also appropriate to point out that my argument was never necessarily with your prediction, but with your methodology behind your prediction, and I think I stated that ad nauseam. Saying "The dollar is going to zero!" without qualifying it with any sort of comparitively applicable data, models, or forward forecasts that differ from the market consensus, is about as useful as a George Clooney speech. "Unemployment is actually 2 billion percent because I know a lot of people that are out of work!" is still horribly flawed, but has some tiny amount of larger validty. I'm pretty sure these two types of arguments are all I've ever read from you... that and unqualified praise for bizarre people who are questionably praiseworthy.