Gz; A weak or falling dollar hurts U.S. equities as much as anything,
it hurts any nations stocks were the currency cant hold it's value,
just chart them and look at the stocks dive right after the value
of the money does..people pull out currency..then others jump out
of the stocks to get out of the currency..and a big down spiral
starts and runs untill the carpet baggers think the time is
right and move in and buy stuff up for pennies on what it was
worth. Our dollar just took a hit, it strated sliding two days
ago..and took a good hit today. Very bad sign..the Japanese may
sell bonds now..but they get back dollars that are worth less
than they were when they bought them, the dollar is being slamed
this is the second time in a month. I do expect some bond selling
as people who bought bonds back last June..are now ahead of
the hot shot equity run up..that has melted down to were thoes
big gains the funds made since june are now trailing what the bond buyers got in hand for the same period..bonds never get much
attention by the herd but the turtle out runs the rabbit more than some people can think.
Take a piece of paper you buy that has interest on it
at 7.5% for 30 years. Sell that 9 months later when the new paper
only has 5.5% you make the 2% spread compounded for "30 years" in
nine months. It's like a dollar that has had it's face value
run up in nine mounths around 86%. I used round figures to make
it simple, but roughly the june 30 year note has gained
about 70%, while new bond prices drop the face value of the
old ones go up.
The great CNBC Jimmy Rogers who shorted the bond several months ago
has lost his clients a ton of money with his enlightened move,
he can't cover that short by buying todays bond, he has to cover
buying the old ones, or enough additional new ones to make up
the differance. The bond market is something he ,in all his
daper dan wisdom , seemed not to understand..small percentage
moves in interest rates can alter the face value as if you
were playing futures. In fact most of the bond market, is a
futures game. A lack luster fund such as PPT has gone up over
21% while at the same time paying the owners almost 10% dividends based on what they paid in May/June..this outstips the advance
made by the SOXX index in the same time frame, while herds
of people jumped into the SOX..as it scremed north as high as
67%..it retrace 48% and is now only holding a 19% gain and the
funds in it have had high expence..reducing most of them to
about 17% gaines, and they might give up more than that before
it's over.
Jim
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