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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (908)	3/1/2004 11:49:47 AM
From: Jim Willie CB	Read Replies (2) \| Respond to of 116555

we got a big disagreement here, but that is ok (on US$) I do not assume that a recession would ensue from money supply contraction, but rather from business activity and employment falling off despite a continued Fed monetary expansion the USDollar will fall and fall and fall until 2 years after the trade gap is reduced substantially that is by far the most dominant factor, with rates a not-too-close second interest rates are a dominant factor in shorterm and (somewhat) nearterm considerations for USDollar relative exchange rates BUT NOT AT ALL FOR LONGTERM TREND for LT trend, look to trade gap, trade gap, and trade gap this is the Achilles Heel for both the USEcon and US$ we could see a FedFunds rate target move from 1% here to 2-3% in the next 18 months, but that would not do jack shit to the trade imbalances which dominate the US$ LT trend the buck bounced off significant LT support at DXY=85 but few look to Asia for another reason the buck bounced it was because the massive JYen rally stalled after hitting the nearterm 95 target (which I clearly stated in Aug, Sept, Oct) so with the Euro in runaway mode, and the JYen stalling after a 12% upleg, it was time for a NT dollar bounce let's see if the next two trade monthly figures make even a dent on the $42.5 billion (2nd largest in history) gap if minimal, then expect the DXY to head toward 80 and the JYen to head toward 100 parity interest rates are a pack of big birds on the horse's butt unless & until the ST rates in the USTrez front are higher than EuroBond, the clownbuck will continue its downward spiral as for federal deficits, anyone who anticipates closing the deficits is ignorant of history they expand during good times they expand even more during bad times I expect an actual federal budget deficit in 2005 of close to $1 trillion, when accounting properly for the SS annual raid the deficit which must be funded is now popularly reported as the deficit, incorrectly the actual 2003 fed deficit was about $700 billion in Nov 2002, I cited 25 reasons why gold will rise they largely apply to why the USDollar will fall / jim