Thursday, October 15, 2009


Though I'm very pessimistic about the long-term future of the US Dollar, shorter term, I think it's due for a bounce as 1) sentiment is extremely bearish and 2) the dollar is oversold.

A key indicator will be: What will the dollar when it reaches 74ish on the US Dollar Index?

Personally, I'll think it will bounce upwards and break back through 78 on the upside (again, short term).

Note: if this does happens, gold/silver will likely also correct (possibly a very good time to buy).


BxCapricorn said...

Martin Wolfe (the guy who gave us the famous "Steps to Financial Armageddon" a few years back, penned this article recently about the US Dollar demise being a bit too dramatic.

I agree with you. One Fed official hints at a rate hike and it will be a hard reversal. Too many traders going one way. As we saw from GS earnings today, they get their cash working their trading casino.

BxCapricorn said...

Well alright. I see where the government is going to save a little something...

My fixed income parents are already having trouble finding any return on fixed income investments (CD,Bonds), and now this. Everybody into the already bubbling stock market. You won't get any dividends, but you'll have a great time, courtesy of the Goldman Sachs algorithm trading robots.

Willy2 said...

A number of indicators seem to suggest that there's another round of credit "unrest" is coming up:

1) The $TED spread is going up.
2) The gold/silver ratio seems to be turning up.
3) IQI (a municipal bond fund) has cracked.
4) LQD has broken the uptrend.
5) $IRX went down as well, again.
6) Baltic Dry index ($BDI) is heading down.

I also watch a number of bankstock indexes e.g. DOW JONES Euro 50 Banks index.

BxCapricorn said...

I don't see the TED spread going up, but I have been watching the BDI and it doesn't look good, especially if dollar weighted.

Under Credit Crisis Indicators, is where I looked at the TED. Hold on, let me check$ted

You're right about TED. Needed more definition in the graph. Thanks for pointing that out.

Willy2 said...

And a new credit crisis could - I repeat - COULD mean that the USD(X) could rise.

It will be interesting to see which sectors of the markets will be affected by the next credit crisis. Two sectors which seem to be in "Bubble" terrritory, are the stockmarket and the corporate bondmarket.

Jim St. said...

According to my information the US is "Hell bent" on maintaining a Current Account Deficit. This pushes the USD down and improves the situation for exporters.

But the flipside is that US citizens have to put up with rising prices. See e.g. oil. It went up (in USD) since december 2008 from about $40 to about $80. An increase of about 100%. But the EUR/USD went up in that same timeframe from 1.25 to 1.49, an increase of about 18%. So, in EUR oil went up from EUR (40/1.25=)32to EUR (80/1,49=)53, an increase of about 65%.

Anonymous said...

Canada is a financial timebomb as well. They are still leveraging up.


Anonymous said...

Practice investing as sex.
Trust no one. Protect yourself at all times.

Never mind any parties claims about how (insert superlative of choice) it is.

It isn't.

USD going up (if you believe the US is still a significant player) then perhaps so.

To me it appears close to the point where the US mainstream realizes they are no longer #1

There's going to be a huge mental reset funk as all these overweight/baby boomers/yuppies absorb the fact that they are becoming impotent on the world stage.