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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: TobagoJack who wrote (248080)	7/2/2003 12:51:39 PM
From: Haim R. Branisteanu	Read Replies (1) of 436258

Jay, IMHO I think that the US economy will recover sluggishly in the 2nd half and not as anticipated. There is a pile of debt hanging over the market and now there are billions upon billions in pension shortfalls (which is the US government responsibility after all)....... the US starts to be like Europe in this respect, ...... with a twist .....of 5% of GDP in trade imbalances. Therefore IMHO the USD will continue to slide as more and more jobs from US, including services is farmed out of the country (to the likes of India China Indonesia etc.) As to the Yuan that is the big question and I really do not know the answer. Japan is manipulating it's currency so there is little political power / justification to move the Chinese "peg" I speculate that there will be some kind of arrangement in few months which may not translate in the exchange rate or "peg" ...... one solution may be to prime China's local market and increase their imports ....... which will make all very happy <GG> ..... But this solution is to reasonable IMHO and may not happen. How US markets will react to changes in the Yuan policy is difficult to predict as I assume that the policy makers are aware of the potential turmoil and they will try to contain it. Therefore I am not trying to predict anything as I do not know how much China is invested in the US and what the policy change will be. As an example, this morning J.P. Morgan gave a negative assessment to the USD due to trade imbalances. Only on her comments the EUR rose 50 pips or almost 0.5% the market is very unstable now, ... to many speculators IMHO playing in FX, ..... with movements of 1% up or down on a daily basis. Long term nothing much has changed except that EZ is now taking steps to get the economy going ...... the US has run out of financial ammunition to prop the US economy IMHO. That is why I speculate that the EUR will rise to force the ECB to lower rates and have the EZ economy going. No answer to a trick question <GG>

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