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

To: Carlos Blanco who wrote (22832)	12/4/2004 12:22:04 PM
From: orkrious	Read Replies (1) \| Respond to of 110194

carlos, you perfectly put into words what I have been thinking. superb post. this is why if there is some CB intervention soon it is doomed to fail, and IMHO very quickly.

To: Carlos Blanco who wrote (22832)	12/4/2004 12:33:39 PM
From: russwinter	Read Replies (2) \| Respond to of 110194

I completely understand your premise, and largely agree with it. Where I depart though is in the area of what I'm now calling "synthetic economics" (use SE for short). I believe the trader/fund community is large and quite loonie, and much more dominant in leveraged paper trading than you seem to suggest. We've seen examples of their behavior over and over this year, including last week in commodities and especially energy. These guys don't just go from bullish to neutral, they go from bullish to bearish and to extremes despite little or no change in the core fundamentals. Message 20823134 They just get offside, and then panic on news that makes little sense. In the case of the USD, it could be something as simple as a rate hike (Europe should have hiked and didn't) and a change in MoP language of the kind you and I would probably laugh at. Frankly, I don't know what the trigger will be, and that's the trouble with today's trading environment. In fact when the rally in the USD comes I'll predict all of us will be doing a WTF (what the fuck). I was cautious on energy, and now am doing a WTF on that sector. Like the energy rout this week, I will likely consider the USD pop to be an opportunity to go anti-Dollar.

To: Carlos Blanco who wrote (22832)	12/5/2004 11:46:51 AM
From: mishedlo	Read Replies (2) \| Respond to of 110194

The post by Carlos seems to make a lot of sense. Here it is for reference. thoughts on the "short" US$ position Message 20827217 ========================================================= My questions and thoughts: OK So it is not shorting US$ it is China, Russia, etc dumping them. Dumping them to who? Let’s say China uses them to buy a mine in Chile, then Chile has the US$. Chile buys stuff from China as soon as they can to get rid of them. Otherwise Chile is stuck holding them. Are these dollars just floating around like hot potatoes with everyone trying to get rid of them? Since China is pegged, the easiest way to get rid of them is buy stuff from China. Send em back? I sure fail to see how this hurts China. They just keep taking US$ and slowly but surely buy hard assets around the world as the US keeps buying cheap Chinese goods. All the other exporters of goods (as opposed to commodities) slowly go down the tubes. The other possibility is countries buy something from the US. Buying something from Europe, Canada, or Japan with US$ makes no sense. Stuff from elsewhere will cost too much. Someone tell me why China would want to end this arrangement. Now what I do not get is why the US wants to end it(given the US propensity to think in the short term). I really believe China depegging is not going to help US manufacturing one iota, but god knows what it might do to import prices. OK that is trade related dollars, what about China just plain exchanging the US$ for Euros on the forex market. China sells dollars and buys Euros. Who has the $ if not China? Is some commercial currency holder somewhere swamped with dollars? Let's look here: cftc.gov We sure see huge commercial short interest in about every currency you can find. That said, I have not followed this much. Is this really a lot of open interest or not? If so, just who is backing these guys up? Does the dollar just sink forever and the commercial longs get wiped out? The slide continues until there is a major collapse/bankruptcy about to take place then all of a sudden there is a mad mad central bank rush intervention to buy US$ to prevent some sort of currency player meltdown? Mish