Buy and Sell Signals, and Other Market Perspectives Message Board

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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives

SPY 695.17

+0.2%

4:00 PM EST

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To: GROUND ZERO™ who wrote (47950)	3/27/2013 3:34:48 PM
From: ItsAllCyclical	Read Replies (1) of 221639

Given what the FED is doing you can't really look at money velocity and compare to normal times. Most of the money is sitting as reserves not getting multiplied so velocity will decline under that scenario. In terms of the Dollar rallying the FED doesn't want it. To the extent that it slows down US growth though it provides cover for the FED to do more. But 4 years from now we're then staring at a FED balance sheet north of 5 trillion and FED debt around 20 trillion not to mention unfunded liabilities. Money printing is seen as a strength now since it makes our system more "flexible" than the EU system. But have to believe focus will shift eventually to exit plan. We'll still be running 1 trillion/yr deficits 4 years from now and quite possibly more. US is less than 25% of global economy but last I checked still north of 60% of global reserves. Not remotely sustainable. Which argument wins is hard to say. I think over the next 1-2 years a stronger Dollar makes sense, but have a hard time envisioning the kind of strength your chart implies. Again most of the good news should be priced in already.

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