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

To: Haim R. Branisteanu who wrote (93324)	4/9/2008 1:38:07 PM
From: Chaka	Read Replies (2) \| Respond to of 110194

Good reason to start buying the USD - I bought 1 million against the EUR at 1.58 and wrote Sept 24 1.43 Put for 0.85% - Trade deficit will shrink - it is already lower v. EU than in 2003 Currencies move in mysterious ways. Broadly speaking, I am told, short term is driven by interest rate differential, intermediate term is driven by trade-deficits and such, and long term is determined by the efficiency and productivity of the economy. However, we may be at a unique time in history with lots of tectonic events transpiring (of course, with the caveat that it is always dangerous to say this time is different). Several folks have been calling for dollar to rally hard for the last couple of years. Bob Hoye, an ardent student of history, bases his views on the fact that the empire's currency always has strengthened during crisis; Kaplan of the true contrarian website bases his views on the fact that everyone is on one-side of the trade (i.e. dollar short); there is the dollar-short-squeeze theory that has been doing the rounds for a long time. While all these arguments sound reasonable, the elephant in the room is the block of money (3+ trillion, mostly, dollars) sitting in various govt. coffers - if ever there is a definition of dumb money, it would be this. While there have been rumblings about a shift out of dollar from these quarters, nothing much has been accomplished to date. When these folks race against each other to shift out of the dollar, it should clearly mark a long-term dollar bottom. The $64 trillion dollar question is what would the value of USD index be at that bottom...