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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: regli who wrote (50569)	5/4/2006 4:52:30 PM
From: sea_biscuit	Read Replies (1) \| Respond to of 116555

The U.S. cannot afford a strong dollar both politically and from the standpoint of the current account deficit. We are already seeing lukewarm demand for treasuries and agencies from the FCBs. I believe that this "politification" of the Fed is impacting the presidential cycle and I therefore expect very different market behavior this year. The GOP cannot afford to lose the house and senate for several reasons. If polls in a few months look as bad as they are today then I look forward to a very tame Fed. A tame Fed will result in a very weak dollar, likely falling below 80 on the DX. Excellent points! Thanks. Regarding the FCBs' lukewarm demand for Treasuries etc., how about private foreign investors? Are they already out of the picture? However, if Fed Bennie stops hiking (or even starts cutting) rates, don't you think oil will go through the roof? The GOP needs the housing and stock bubbles to be intact if they have to have any chance to win in Nov, but they also need lower oil prices. For the same reason, even though an unprovoked attack on Iran might improve their chances in the elections, the resultant skyrocketing oil prices will bury them.