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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: shades who wrote (66566)7/21/2006 1:03:45 PM
From: bond_bubble  Read Replies (1) of 110194
 
Did you leverage your house yet and short XLF like you promised?

Shades, I read Doug Noland for direction on credit bubble. As he has been saying, the credit bubble is still going strong. Uncle is being impatient because Doug doesnt provide timeline!! But I've tons of patience!! My strategy is to short finance - but when the time is right. I anticipate Fed to raise interest rate to 5.5 in August - then pause and rise later. My original plan was to short (buy puts) in end of August/early september. Now, I plan to watch how the pause plays out.

you don't agree? What is more important to american and chinese politicos? Strong dollar or happy employed voters?

In order to take advantage of the "Falling Dollar" (against commodities rather than currencies), US will have to build infrastructure to convert the raw materials to products. Doug said few weeks back that this build up (including energy buildout to support these manufacturing base) itself will be highly inflationary. There is no hope for Fed to lower rates to support the falling asset markets. During the Asian financial crisis, asian currencies crashed but that did not increase their exports, did it? How can USD fall against commodities and increase US exports? Especially after the manufacturing base has been destroyed by prolonged credit bubble. Obviously, Unemployment is what matters the most and that is why Fed will increase interest rates to arrest unemployment. Unfortunately, increase in interest will cause more layoffs. Some 80 years later, people will still be blaming Fed for interest rate hike!! Read the 1920s Ben Bernanke:
dailyreckoning.com
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