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

To: Taikun who wrote (58621)	1/9/2005 11:52:14 PM
From: energyplay	Read Replies (1) \| Respond to of 74559

Carry trades get wound up, money comes back to the US (most carry trades were shorting the USD) and what does it do ? Pay off the debt - the USD were borrowed. When debt is paid off, money is destroyed. There is usually some capital in various trade, in addition to the "carry"....so there will be some additional funds in the US. So the effect is somewhat reduced. Less money around means less to chase commodities. One of the hidden macro economic dangers of low interest rates is they make it too easy to pay off debt. With debt being paid off early, the creditor will ususally need to make a new loan - and this can push interest rates down. 2005 might be the year of cash.

To: Taikun who wrote (58621)	1/10/2005 12:17:09 AM
From: energyplay	Read Replies (1) \| Respond to of 74559

Precter is a bright guy, but has a pretty strong bearish bias. Also, much of his view seems based on Kondratief waves, multi-generational economic and social patterns. Now that people in most developed countires are living MUCH longer - 75+ instead of 60, and able to work longer, some of the amplitude of the long economic waves will spread out. Generations now live longer than in Kondratief's era. Extensive birth control and Immigration have changed the demographics of the US. World wide capital flows and the outsourcing of jobs will also reduce wave effects and wave causes. The dot-com & telecom boom lead to the type of wild over-investment that we expect to see in a wave, which should be followed by several liquidity crisis and capital spending going to near zero. Capital spening is down, but NOT zero in the US. Alan Greenspan, KBE, has prevented a liquidity crisis. Demand from China and the rest of the world, plus real estate related spending, has enabled a 'softer' lnading in the US. Asia buying US treasuies and corporate bonds has pushed money into the US economy, and allowed Federal defict spending without pushing interest rates through the roof. Another way of looking at this : The economies of individual states in the usually US don't have pronounced economic waves, since they are part of a much larger economy whic provides resources,markets and stability. The US economy now has a degree of this relationship with the world economy. So I would look at Pretcher's forecasts and expect that reality will be more like good size movement within a trading range (maybe a wide range) rather than wild apocalyptic swings. I think Mark Faber and to some degree Steve Roach are are also swing for the fences too much. ******* The bad news for investors like you and me is this means macro or sector bets, like gold, oil, J Yen, T-bonds, etc. will not have movements as large or as long as we would like. This means we have to work harder to get good returns. 1) Better timing on macro and sector moves. Watch many sectors, wait till they move, Get in, hold for a while, when it rolls over, get out. Look at the 4 recoveries of the Nikkei market in the past 10 years - good money to be made riding these moves up - but not a multi-year buy and hold. 2) Stock picking. More staring at charts, reading financials, scrolling through 10 Ks and other filings. At lot of work to find 8 companies that won't work and 3 that might. Since I expect the stock market to be in a trading range, those 3 names may work for a while, then start to roll over...