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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (21637)	11/10/2004 11:11:23 PM
From: russwinter	Respond to of 110194

The Webb is pretty close to the numbers I presented: financialsense.com More signs of intense Dollar bailing going on. They are going to have to pay up (higher interest rates) to stem this: RPT-Mideast selling seen pressuring dollar further Wed Nov 10, 2004 05:25 PM ET By Gertrude Chavez NEW YORK, Nov 10 (Reuters) - The beleaguered dollar could come under further pressure if Middle East investors continue to sell the U.S. currency in favor of the euro, as traders said they did on Wednesday and last week. Analysts have mixed views on why the Middle Eastern investors are unloading their dollar holdings, with some claiming the move was in protest over U.S. foreign policy. Other analysts, on the other hand, say dollar selling was part of a hedging strategy given the fall in oil prices. Traders in New York said that Middle East accounts may have sold as much as $7 billion in dollars last week between Wednesday, the day after the U.S. election, and Friday. "There has been huge selling of dollars by the Saudi Monetary Authority over the past week," said Hugh Walsh, vice president of foreign exchange with Fortis Bank in New York. A U.S.-based dealer at a large European bank on Wednesday also reported Middle East selling of the dollar overnight and during the New York session. While the figures could not be confirmed since there is no official agency that monitors currency market flows, some dealers who see the trading action said the source of dollar sales unequivocally came from the Middle East. Selling by Middle East names last week helped push the dollar to its then all-time low against the euro at $1.2968, traders said. On Wednesday, the euro rose to a fresh record peak level at $1.3005 (EUR=: Quote, Profile, Research) , according to Reuters data. Middle Eastern investors have dipped in and out of the market over the last two years, selling the greenback and buying euros for some time, analysts said. For instance, just as U.S. President George W. Bush declared hostilities in Iraq were all but over around May last year, the dollar had fallen to its lowest level against the euro at that time and weakened sharply against a clutch of currencies. Dealers attributed part of the dollar's decline on that day to selling by Middle East oil producers. Analysts said recent dollar selling from the Middle East, especially oil exporters, makes sense, as crude costs have come off their peaks. U.S. oil futures (CLc1: Quote, Profile, Research) fell from a high around $55.67 per barrel two weeks ago to trade well above $48 on Wednesday, still up about more than 50 percent since the start of 2004. HEDGING MAKES SENSE WITH FALL IN OIL PRICES "When oil prices go up ... (Mideast oil producing) countries accumulate reserves and they're going to park them in U.S. dollar assets," said Binky Chadha, global head of macro FX research, at Deutsche Bank in New York. "So as oil prices started going down, they clearly had an incentive to hedge. Any (dollar) selling was clearly in line with that incentive," he said. Other analysts say that selling the dollar is actually a savvy investment strategy. "The re-election of an administration that pursues an implicitly weak dollar policy and that has no plans in curtailing the budget deficit anytime soon is a strong catalyst for the dollar's decline" said Ashraf Laidi, chief currency analyst at MG Financial in New York. Despite the Bush administration's strong dollar stance, many in the markets believe the policy has become somewhat meaningless because of the huge U.S. trade deficit, which requires a weaker greenback to help redress the shortfall. Still, some in the currency markets believe that disenchanted Middle Eastern investors could be taking out their disagreements with U.S. policies by selling the dollar. MG's Laidi said President George W. Bush's election victory "evokes sentiments of unilateralism in foreign policy," referring to the U.S. government's use of military power to ensure international stability. "That tends to trigger dollar selling especially by Middle East accounts which may be prompted to put their money where their political mouth is," he noted. Some market participants are dubious, however, saying the speculative nature of investment flows and the generally closed nature of Middle Eastern economies make it difficult to determine the motivations of investors from the region. "No one knows for sure. Anybody holding dollar assets when it's going down has an incentive to sell them. But there is no firm evidence," said an analyst from a European bank.

To: orkrious who wrote (21637)	11/11/2004 6:25:13 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

i must say, it seems Lance has pretty much missed the rally in gold and energies and has been calling the top many times. i suppose eventually he'll be right. i like to read him sometimes as a contrarian's contrarian, but thank god i didn't listen to him. all in all, i think people tend to shoot themselves in the foot when they try to play the long term and the short term at the same time.