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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (56987)	12/7/2004 10:17:20 PM
From: gumnam	Read Replies (1) \| Respond to of 74559

I predict - US rates will go higher, US housing will slow down not crash , US equity will fall not crash and USD will strengthen against pretty much everything. Emerging markets in Latam and Eastern Europe will suffer , Asia will do ok - with no significant changes in Asian currency levels. Why should this happen ? My assumption is Fed will continue to raise rates and this will eventually cause the bond carry trades to unwind - which also means US back end rates go higher. That will slow the consumer, cause US equities to sell off, but the whole process will be a slow torturous grind and thus prevent a big selloff. EMG markets will suffer due to higher rates, lower liquidity levels, and general US equity weakness. China may or may not change its peg - if they do it will be to some vague and ambiguous mechanism which they will keep secret and controlled to keep the actual change fairly small. That also means the rest of the Asians will not let their currencies change too much. Overall volatility will continue to be low and this will drive most hedge funds nuts and cause a second year of suboptimal returns for most hedge funds. HOW TO MAKE MONEY USING THE ABOVE- 1) short 10 year bonds with sufficient trading to take profit everytime it sells off , 2) short SPX with sufficient trading to take profit everytime it sells off, 3) bail out of EMG, 4) listen to Jay about investing in Asia realestate. Ciao Gumnam