The point is, being long stocks is supported, while even a 5%
decline is not tolerated - there are immediate cries for help
from the Fed, and the Fed responds. Fundamentals for stocks
have not been good for years. But something has to go
down in this environment, and that something has been the dollar.
So far the dollar has been falling gradually. The reason
is foreign buying, which countered the huge trade gap outflows
($2 billion a day) The Fed has NOT
been responsible at all, they have succumbed to political pressures -
raising rates from 1% in baby steps, while printing at the
same time, discontinuing M3, lowering margins on comex for
market makers, fudging with inflation statistics, etc.,
you name it, they've done it. So NOW the
dollar and the Fed credibility is a big question, and that's
a result of great many years of bubble blowing. Once it's
payback time (Fed's credibility is completely lost), the dollar
will start dropping fast and will keep dropping. Nothing will
stop that, and the LT rates will spike, so will gold.
All imho. Wait, gold is already spiking. Asset inflation has
replaced savings in the US. Asset inflation must continue,
or else... Now it's not just assets that are inflating - food,
oil, you name it. I PRAY we don't get the German scenario,
cause in my view that's a definite possibility. So, while
I hope that the Fed becomes responsible all of a sudden, I
can see a scenario when they don't. Then it's not going to be
40 for USDX. It will fall into the bottomless pit. |
