Hello Malcolm, I have some bad news and some good news.
The bad news is that the counter-trend rally of USD (DUEED) is continuing because the large hedge funds are still at the early stages of deleveraging (paying back their USD loans) from positions they built up last year.
As the losses on the equity markets panic the retail crowd, eventual redemption will cause the mutual funds to start selling, and as ...
The hedge funds borrowed a lot of USD last year to speculate in technology, housing, commodity shares, bonds, commodities, gold and gold shares.
Now that Alan Greensputin has given the funds the signal that FED discount interest rate will eventually have to be raised, the funds are heeding the signal by selling off what they bought last year and paying down their USD loans.
As they continue to do this, the USD will exhibit the counter-intuitive characteristic to rise against other currencies even as US inflation, fiscal and trade deficit positions, housing vulnerability, energy picture, and war progress continues to dictate that the USD ought to fall relative to other currencies.
The commodity and commodity shares markets are small relative to the resources at the disposal of the speculative funds, the flood of liquidity allowed by the US FED, and the panic-prone currency market where traders tread carefully when taking a toilet break lest they be bankrupted by the time they return to their trading desk.
And so commodity correction is ferocious relative to Nasdaq/Dow/S&P500 's so far tepid adjustments. These large share indices will have their turn in the grinder.
Housing? it should be interesting to see the interaction of housing to the health of the financial markets and the well-being of the real economy.
How high can the USD go? I do not know.
How low can commodities go? I have no idea.
How low can gold drop? I have not a clue.
What is gold worth? More and more, at least to me.
What is housing worth? less and less, in terms of both capital value and as a companion of the US-led housing bubble as it floats a field of afford-ability pins, oriental financial daggers, and prickly desert war plants.
The China economic contraction is continuing to scare a lot of folks, finance.yahoo.com^HSI&t=6m and I it may scare a lot more people in a big horrible way.
I think what ought to be will be, meaning the world will turn out OK, in the sense that gravity will work, and value will eventually counteract nonsense.
<<It's just a little strange>>
... but I think it will all turn out less strange.
In the meantime, all the Call options I sold short are getting to be more worthless by the day, thus allowing me to keep the shares on which the Calls were sold against, and keep the premiums collected at original sales as profit, offsetting the losses I have incurred on the shares.
Small comfort, but an understandable one where all are expected to lose some.
<<Well what happened to Brazil or Argentina doesn't seem to be happening to the US ----yet>>
We may be looking over the wrong time measure and incorrect fractal scale.
What may well be taking place in the US could be what happened to Argentina over the past 100 years, and not what happened in that previously blessed country over the past 5 years.
The unwinding of empires, in the age of Internet and derivatives, still may take a long while.
On another front, Stratfor has now officially pronounced that China may yet again come apart, imminently, as dramatic as the overthrow of the Party and slipping of the nation into absolute chaos.
Odd thing, I am close to the supposed storm center, and yet I see not much to indicate the validity of Stratfor's spin on facts.
So, lots of developments to watch and brief.
The pilgrimage to TEOTWAWKI has some distance to go yet, and will provide much learning still.
Chugs, Jay |
