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Strategies & Market Trends : The Residential Real Estate Post-Crash Index-Moderated
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To: koan who wrote (25093)6/11/2011 1:08:04 AM
From: TH1 Recommendation  Read Replies (2) of 119361
 
k,

The strong dollar is possible for a number of reasons.

1. Most all other major fiat looks even worse by comparison.
2. The potential for a dollar crisis on another 2-3 trillion bump in the debt ceiling must be weighing on the Fed and Treasury. They want a weak dollar, but they don't want a crisis. Bumping the dollar up before the vote will provide a buffer and help them with their ultimate goal of an, "orderly" decline.
3. Ben knows the world is fully aware of significant increases in inflation. He will attempt something like 2008 to wack down keep commodities and take the pressure off the inflation finger pointing.
4. A stronger dollar will produce a weaker market and short term, that is what is needed to open the door to the next QE effort, irrespective of what they call it.
5. I believe the Fed will absolutely work to make the Ten year print a yield equal or lower than where it was at the start of QE2. The reason for this is very simple, as the Fed economists will then be able to write a zillion papers about how effective QE was/is and thus justify additional QE actions in the future. A stronger dollar will reverse the risk on trade and push those in equities back to Treasuries. I've been predicting this for months and I comment on the Ten more than anything else in the market, for I believe the Ten is THE focus of the Fed at this late stage of the grand QE experiment.

Those are five off the top of my head.

All short term and by November the dollar will be back to significant weakening. It could happen soon if the Fed yells uncle early.

GT
TH
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