next few months will be strange, esp with effect of US$
the USDollar is now at a support level of DXY = 85,86
this has served as support over a few years
it will be easier to defend this level by central banks
the Fed, the Bund (ECB), and BankofJapan will be hard at work
of course, their output is from a printing press
and thus doomed to catapult gold & energy even higher
as the US$ bounces numerous times off the 85-86 level,
we will see a big opportunity window for Europeans to build their positions in gold and energy stocks
appreciation in nominal terms will not be so adversely affected to US$ slides
then in spring (early or late, dunno) the US$ will teeter
I expect all hell to break loose during prez primaries
China bashing might come back into vogue, and even pay off
but the loser will be the USDollar
the bashing will make a dangerous transition as...
CHINA IS BLAMED FOR RISING AMERICAN FOOD COSTS
exports will pick up, but wont mean much more than a beer mug bailing water out of a large 16-man rowboat
BEFORE ELECTION, WIDE TALK ABOUT EMBARGOS AGAINST CHINA
AND TARIFFS WHICH WILL SQUARELY SHOOT THE USA IN THE FEET
THE FOCUS WILL BE ON JOB EXPORT AND RISING FOOD COSTS
OUR LEADERS ENJOY FOOD SALES TO ASIA, BUT WILL RETHINK
by spring, consumers will see the impact of a weakening US$ in the form of higher Asian import prices, higher energy prices (home heating and commuter gasoline), and higher food prices (export driven)
BY SUMMER, RISING COSTS WILL FINALLY HIT SPENDING PATTERNS
then the US$ goes below 85 and heads dangerously toward 80
but not until the spring
the trade gap might close to $36-37 billion monthly
it was $38B in November, or whatever the most recent month was
I cannot see the trade gap getting down to $35B
we dont export enough goods, way too narrow a list
consumer costs will be rising
WE WILL GET MAJOR CROSS-CURRENTS FOR BONDS
MishMan will be right for some time that weak economy will be the driving force behind falling bond yields
but the trade gap will remain wide
but the consumer prices will rise (even the absurd CPI)
but the energy prices will be astounding (leading to labeled ENERGY CRISIS)
BONDS WILL BECOME EXTREMELY VOLATILE BY SUMMER
with yields pushed down on economic weakness, as consumer spending slows, refi's new round is puny, tax incentives fade in importance
with yields pushed up by rising consumer costs, energy costs, and the perception of nascent price inflation back on our shores (largely imported)
/ jim |
