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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (75)2/16/2004 7:00:27 PM
From: FiveFour  Read Replies (2) of 116555
 
Thanks Mish for taking the time to respond and I agree with your comments.

- US likely wants a weaker currency to help with exports and maybe reduce outsourcing arb.
- There seems to be a very low likelyhood that the US will raise rates because of the economic/job situation is not solid in an election year.
-It is more likely that EU will lower rates.
-Also possible that EU will increase intervention, however these actions may slow, but not stop the dollar's slide.
-The US could use a moderate dose of inflation to help its debt problem and that will also suggests holding rates.
-EU and Japan and US central banks cant agree on what should be done, if anything.

Putting the pieces of the puzzle together, short dollar position or interest rate spread on USD-EURO is looking low risk/high reward.
>> That is what is starting to bother me because the risk/reward on this play seems to be out of whack so I am wondering what if anything I am missing.
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