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Strategies & Market Trends : The coming US dollar crisis
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To: Giordano Bruno who wrote (4371)2/18/2008 9:45:23 AM
From: Real Man  Read Replies (1) of 71446
 
Dollar - Bernanke Breaks The Buck

Written by Boris Schlossberg, Senior Currency Strategist and
John Kicklighter, David Rodriguez. Currency Analysts

dailyfx.com

"However, perhaps the most important release last week was the
miss in the TICS data which printed at 56.5 versus 73.5
expected. The capital flows were substantial enough to offset
the shrinking Trade deficit, but the data was for December and
it will be interesting to see if capital flows begin to
contract in the wake of January’s turbulence in the equity
markets. As we’ve noted many times before the financing of the
US Trade deficits has been a non-story for many years as
capital flows have been more than sufficient. However, if the
mismatch between TICS and Trade deficit becomes persistent,
the whole focus of currency trading will shift from concerns
about economic growth to worries about structural viability of
the US economy."

Another little note - the main TICS source for the past
3 months, contributing to more than 2/3 of the flows:
London and the Caribbean . In other words, we are buying
the buck. Gulp!

My main question: Will the tresuries and the buck tanking
simultaneously lead to WTF stock market rally from Hell?

Answer: maybe Yes, but more likely No. One needs to be very
careful (see the thread head - what happens during a currency
crisis). It may also
lead to a crash. I'm watching 1330 for spoos as a potential
trigger to get short. If the Feds manage to rally spoos with
their futures activity, there will be better entries in low
or mid 1400-s. The credit market is broken, so... betting
on da bottom is now dangerous.
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