Mike, as I said few weeks back, the Indonesian rupiah is destined to reach 20,000/dollar (it was then at about 9000). As strange as it seems, if the Yen reaches 150 yen/dollar, that may cause flight of capital out of Japan, at a rate much larger than I expected just few weeks ago (at the time I was talking about a "slow" leak of $200 billion/year out of Japan).
This flow of liquidity (a large portion of which will reach our shores, IMHO) will fuel a summer rally (I have June 22 to June 24 as the bottom of the current minimelt) here. But within 4 to 6 weeks after that, we might wake up to the fact that a recession (almost depression) in the rim will finally have an impact on our economy. I would guess that a breach of the 150 yen/dollar may signal a top in our market. I still do not see a bear market, however (in the US), just a very nasty Autumn spill of a 1000 Dow points (from about 9200 to 9300 on the Dow late in July?). If that spill is fast and furious, it should be over by late October early November, if it is more like "Chinese water droplets drip torture", then, I may reconsider my long term bullish stance.
Right now, I still think that the power of liquidity will overcome the fear of a recession in the US. I also feel that long term interest rates at 5.5% (we are almost there) will put a floor on US equities.
Zeev |
