Soapbox [my post tonight on the FOOL]
Synthetic $ shorts
Richard Russell proposed the idea of the synthetic US$ short.
It goes like this:
If you were long stocks, gold, commodities, foreign currencies, etc etc etc you were really in affect short the US$.
Damn near every asset class went up in the "grand reflation" of 2003(my term but I would not be surprised if someone beat me to it).
Now what?
At some point with all the debt we have, is the US$ are in short supply?
Ae we there yet? What do you do when you are out of a job and need money? You have to sell assets or get more credit. How much more, can "more credit" go up with sinking jobs, sinking wages, and rising gas and medical expenses?
People are going to need US$. That may be behind this latest US$ rise. How much more can stocks rise? Is another round of refis coming after this bond massacre? Well perhaps, but surely not in time to do anyone any good. Fiscal stimulus is running out, corporate tax credits expire this year and have probably been used up by now, so.......
As stupid as it seems, with this trade deficit and all, are US$ in short supply (or will they be soon)? If so, the $ will rise, and assets will sink.
China has way way way over heated. Copper seems to have topped, silver seems to have topped, shipping rates are finally headed lower, but....
One month does not make a trend!
Bear in mind that goes BOTH for commodity prices as well as jobs.
My personal opinion is that we saw a blowoff top in almost all commodities except oil (too many geopolitical risks), and perhaps gold and perhaps silver. Since we have to eat, add soybeans to the list but if my suspicions are correct every farmer in the world will look at soybean prices and plant them and corn will go thru the roof next year.
Now what?
People have been asking that all day.
Where did all the new people come from anyway?
No matter where it is.... welcome.
This is the pace to discuss these ideas but I will propose a few:
1) The stock market has topped or will do so this year and we will have a steep slide. Bear in mind, new highs (one last F you to the bears is certainly possible).
2) If the FED hikes, it is all over nellie. They will likely not hike as much as is priced in.
3) Gold and silver miners will continue to be hard to trade. Conflicting factors: Rising demand for US$ (selling of equities acropss the board) vs a US$ that wants to fall but every other major country is in piss poor shape as well
4) shorting rallies as opposed to buying the dip could be more profitable from here on out. Max pain has worked for a couple of months in a row now, perhaps it will be back in vogue now that everyone has forgotten about it.
Mish |
