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To: Little Joe who wrote (16806)	8/28/1998 10:12:00 AM
From: Steelguy	Respond to of 116815

Joe, If I may give my two cents worth..... the US$ is flying simply because there is truly right now, no other " PERCEIVED " SAFE HAVEN for people's hard earned money. With all that is surrounding the world market right now, the Yankee buck is king, more money supply or not for the time being. US bonds are looked upon as secure right now and the US economy is backed by hard assets ( industry etc. ) not by soft assets ( commodities ) as in Canada. Canada is a resource based economy or at least perceived entirely as one and is paying the price. The US dollar may start to feel some pressure soon granted and then what will be left for the world to put their money in???? Could it be that then we will see POG pop? I say yes. ONly when the market turns on the US bond market, economy, $ etc.... A little impeachment would go a long way. ( not that I am hoping for that :o) ) sG

To: Little Joe who wrote (16806)	8/28/1998 10:39:00 AM
From: Zardoz	Read Replies (1) \| Respond to of 116815

Car racing up a hill going at a very fast rate. Engine blows a cylinder. The mometum continues, but the car is still broken. With sufficient M2 rate {not M2} you push the US FED bond market, and the corporate bond to lower yields {they move in parallel}. This creates a higher PE value on equities, and makes capital inflows into the USA plausible. Thus you have a create a self fulfilling cycle. As long as the M2 Rate continues, than the US dollar will continue to appreciate. And at the same time you put downward pressure on other currencies. Some currencies can withold a large pressure, other fracture immediately. Wonce you remove M2 rate pressure, you cause liquidity to dry up. The BOND market is much larger than the equity market. With liquidity down, the currency which are deflated relative to the US also loose liquidity. And than the downward spiral starts. Currency fail, and the USA seems to be a safe haven. Bonds yields continue to drop, but the yields no longer support the PE's values. And thus equity, and yields move in opposite direcctions {decoupling}, and down falls the markets. Up goes the USD, down goes gold {For many reasons} Yes the markets were suffering from securities inflation, and M2 masks that. Now they are reflecting the truer deflationary trends. Once Disinflation goes to deflation the US dollar will drop. Yields will fall, and the markets will follow. The markets are telling you something... SELL certain equities. Trace the DOW, Russell, S&P 500 against the M2 rate and you'll see that it all comes back to 04/22/98 {or so} when the MACD of the M2 started downward. {A change in rate, removal of liquidity} There is no bull here, you can check for yourself. This analysis is called Monetarist.