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Gold/Mining/Energy : Daytrading Canadian stocks in Realtime -- Ignore unavailable to you. Want to Upgrade?

To: parker_meridian who wrote (52352)	7/25/2001 6:04:45 PM
From: Vitalsigns	Read Replies (4) \| Respond to of 62347

US Dollar The market is starting to question the Bush administration's strong dollar policy. There were meetings today in Washington with some heavy weight attendees such as Robert Rubin and Paul Volcker. America's growing current account deficit is unsustainably high, senators were told Wednesday. Former Treasury Secretary Robert Rubin said the strong dollar policy shouldn't be changed, but the government should encourage more domestic savings to reduce the dependency on foreign capital. Former Federal Reserve Chairman Paul Volcker warned that the dollar could crash like the stock markets did. Goldman Sachs' Bill Dudley said the strong dollar policy must be jettisoned now while U.S. assets are still attractive. Morgan Stanley's Stephen Roach warned that the world's economies are in recession and suggested that the major economies must undergo significant structural changes. The Us dollar policy has been changed unofficially IMO already. O'neil says its still supports a strong dollar policy publicly but what else do you expect him to say. Any confirmation publicly that things have changed would send the dollar spiralling down, at this point it will be a slow bleed until the public realizes what is REALLY going on. I was expecting the US Dollar to remain strong until the fall but I also expect more of a rally over the last 6 weeks in the Markets . Since the rally never materialized and we are now below key supports for the markets, it is only reasonable to expect the US dollar to falter sooner rather than later. A falling US dollar will knock the pants off any market rally going forward , if its not one thing its another. I agree with Nich, its no longer a question of IF the markets will fall , but a question of When. It may not be implulsive downward but a steady decline will have the same kind of effect. Interest rate cuts will no longer have the impact that they once had on announcemnt because the end is near for them as well. Anything more than a .50% cut next time and we now would negative interest rates (difference between interest rate and core inflation , estimated at 3.25% in 2001). So bonds are not rallying strong on expected further cuts because they also realize that rate cuts are ending. If this was springtime right now , I would bet for a rally as the spring to summer months are quite bullish in the economy, but as we are about to enter the final months of the year, we have tax loss selling to contend with again, Mutual Fund rotations , adjustments and re -positioning , and new rules in the US in Sept that could negatively affect buy side liquidity. SO if the Buy side is not going to be there, it will not take many sellers to bring this market to its knees. One tell tale sign is that each bounce off support is weaker and weaker . Its only a matter of time. Vitalsigns