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

To: regli who wrote (25229)	1/24/2005 7:10:53 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 110194

that survey is a farking joke. it excludes China and Japan, LOL. the genius who wrote the article was on NPR today calling for USD to go to zero.

To: regli who wrote (25229)	1/24/2005 7:26:13 PM
From: Wyätt Gwyön	Read Replies (3) \| Respond to of 110194

Felix Zulauf presented some intelligent contrarian thinking on USD at the latest Barron's Roundtable: Zulauf: Last year I picked one theme -- energy. This year my appetite for stocks is extremely low. I have a few shorts and a few longs. We manage a long/short portfolio of European equities, and a fund of commodities and related equities. Shorting individual U.S. stocks is out of my universe, though there are some attractive shorts. My first idea, going long the U.S. dollar and shorting the euro, probably will work only in the first half of the year. There was a universally bearish view late last year that the dollar would continue to decline, particularly versus the euro. Warren Buffett reportedly is short $20 billion of dollars. The hedge funds are short. The proprietary trading desks are short. The corporate sector is short big time, as are wealthy individuals around the world. The short position outstanding must be huge. The Fed started easing aggressively in 2001 at the same time the dollar peaked against the euro. The euro at the time was 82 cents. This was also the point at which short-term interest rates in dollars fell below short-term rates in euros, a situation that continued until December 2004. That interest rates today are a fraction higher in dollars versus euros isn't important. What's important is what it reflects. Q: And what is that? Zulauf: A change in stance by the Fed, which is now tighter than the European central bank. Meanwhile, the market is positioned excessively for a further dollar decline. If short positions grow too big the selling begins to dry up, as is happening now. Also, if Asian central banks continue to accumulate dollars, the supply/demand balance in the currency market clearly favors the dollar. So, you have a set-up for a very sharp counter-move in the U.S. dollar. It could last for three to six months. Neff: How sharp a move, Felix? Zulauf: At its peak, the euro was worth $1.36. This morning it traded at $1.31. It could decline to $1.10 or $1.15 within months. online.barrons.com