Anyone on this board that is prognosticating the demise of the stock market given a huge depreciation in the dollar and an increase in bond yields is a fool and deserves to lose all their trading capital shorting the market. IF THE USD DEPRECIATES AND BOND YIELDS INCREASE RAPIDLY DOW 15,000 WILL HAPPEN!!! I am almost finished with my Masters of Science in Economics at UTEP and after years of trading along with my current research I boldly make this prediction. I know I am right and I think that whoever believes the hype that the end is near given a depreciating $ and rising bond yields is stupid and deserves to go broke. How do I come to my conclusion you ask? First, market dynamics have not acted according to traditional models in recent years. This does not permanently invalidate any past observations but this requires adjustment to the current reality, which good traders should understand. Using this assumption one must ask what are the probabilities of certain outcomes and strategize from using that paradigm. Without going into great length to explain what possible outcomes that I have incorporated into my model (plus an economist has to have a few secrets) I will just list a few of my conclusions and let the tough crowd that frequents this board hash it out. 1) Dollar depreciates gradually at first then sharply because the intervention policies of the Asian paper tigers is no longer desired. The Asians think that they understand that an election cycle is beginning and wish to influence this cycle for their own gain plus their ability to keep propping the dollar is diminishing rapidly. 2) As predicted, bond yields will rise preemptively given the first sign of trouble. This action will be broader and more pervasive due to EU (ECB) intervention (jumping on the bandwagon) in dumping US capital and flooding the market with more USD currency. The EU will make this move because they desperately want to position themselves as a reserve currency and opponent to the US. France, Germany, and surprisingly Spain will lead the charge with help from Russia. 3) We will experience a bull run in our commodities markets because of hedging while our equities market will initially stutter. 4) Alan (pooping-in-his-pants) Greenspan will initially have no choice but to sharply increase the monetary aggregates to prop up the yield curve all the while US manufacturers will immediately begin to ramp up production with their great underutilized capacity. 5) The "ramp up" of US production is not an overnight affair and will take many months. In the interim unemployment will drop, inflation will start to surface, our external balances will start to harmonize, and US equity markets will shoot through the roof as traders and investors start to believe the hype. It is at this point that one of two things could happen but for the scope of this conversation I will stop here. 6) I forgot to mention the housing market. That game has already been played to Nth degree. I seriously doubt that increased yields will take the wind out of something that lost its strength a couple of quarters ago. The effect on this market will be negligible. As long as 30 year fixed rates stay under 8.5 people wont be swayed off a home purchase. Now I have generalized to a great deal because I don't want to type all day. Whether you want to believe it or not we are headed for a huge bull run given that a few things happen. I think that the dollar is goingly to drop that is why I bothered making this prediction and after the DOW has reached 15000 we will be faced with a fork in the road. 1) The bull market was just another speculative bubble based upon false economic reasoning and we will have to deal with the consequences of that all over again. 2) The bull market that was created using false economic reasoning will actually be sustainable because during the unfolding of this drama economic conditions improved justifying the bull run. All of my predictions begin with the assumption that "W" Bush is grossly unpopular abroad because of active foreign policies regarding terrorism and his enemies are conspiring to affect this election cycle. Look at the numbers, the clues are there. BUT, these enemies are just laying another golden pile of poo for "GW" to step in... Remember, we are just a bunch of reactionist synchos to the markets. If we had any foresight we could avoid this and take some protective action, but we are doomed to participate which will beg the question; is DOW 15000 a bad thing?
YOU HEARD IT HERE FIRST... AND IF YOU WANT A COMPLETE ANALYSIS AND THE ABILITY TO LOOK AT MY DATA, IT IS GOING TO COST YA BIG $$$$$!
Well, you're right about one thing, there's a wild and whacky future in the offing. It's going to be interesting trying to stay abrest of global capital shifts.
guess i better start loading up on diamonds!!!!!!!!!!! i do have a few questions for nobody: Are fannie and freddie appropriately hedged to withstand this rate move? You didn't mention the federal deficit once in your analysis, is it discussed in your full report that we have to pay the big $$$$$$$$$$$$$ for? You mention that unemployment will decrease, what sector is going to take on the surplus labor we now have. If W decides to look for WMD in Iran or Syria, do you retract your prediction?
I was with you until the part about increased interest rates and inflation forces manufacturers to ramp up production. How's that work again?
I don't have to be correct. I don't care. I just wanted to share a few thoughts. Thats the great thing about being an economist, its a lot like being an analyst, I only have to be right once or twice in my career. Come to your own conclusions, if you are good at what you do you will make alot of money, if not teach!!
I don't even think the people that run Freddie and Fannie understand their quagmire of hedging strategies well enough to understand if they are properly hedged or not. Who cares about the federal deficit, really, it won't matter, not to our analysis or in any case for that matter! If W decides to further his campaign on "Hodgies" I would double up on my bets! BTW, why would you want to buy diamonds when I just predicted a major bull run in equities????????