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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: KyrosL who wrote (93461)11/13/2007 7:47:29 AM
From: carranza2  Read Replies (1) of 206092
 
Agree that there has been a reduction in the trade deficit ex energy. Given a sluggish economy and the currency devaluation, I would expect the trade surplus to continue to narrow somewhat from current figures. Absent conservation measures, I would nonetheless expect monthly deficits to run in the $50 billion range if the price of oil remains more or less mired in the 80-90 range, which is probable.

As is the case in most market swings, I think the upward valuation of some currencies, particularly the Euro, has been excessive. Absent solid fundamentals, they have probably gotten ahead of themselves.

Here's a question for you. Assuming the monthly trade deficit figures remain more or less at the $50 bn range, has the slide in the dollar stalled? Does the fact that it is probable that US banks will be unable to export instruments such as CDOs make a difference? Will the Chinese actually go forward with their intention to move away from the dollar if its slide has stopped and that of the Euro has begun?

In other words, will Goldilocks return if we get back to trade deficit figures in the $30 bn per month range? Can Goldilocks survive in the midst of the popping of the housing bubble and all that carries with it?
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