Hey DG Dollar looks prime to rally!!

spigrimace says on Feb 27, 2007, 13:20:

got any money left after today? nasty stock market sell off. and more volatility coming!

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Brians says on Feb 27, 2007, 13:27:

Man I have been 100% cash for 2 months I have not seen anything but slow down in the US economy and record levels of margin debt. I was just parking in cash at 5% waiting to wire some to Colombia and just wait out with the rest. It sucked for the last month and a half even my 401 is cash. Now I am licking my chops. I think we have a little way to go on this thing but I think that wire I have been waiting on will get a lot cheaper in the next few days and weeks.

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spigrimace says on Feb 28, 2007, 04:26:

Brians So in other words we´re drinking 8 años next time you come down? ja ja ja.

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southern151 says on Feb 28, 2007, 04:48:

I am not the expert... In this field by any means but from what I have read elsewhere is that the US market is more stabilizing than falling. I know that it went down 400 pnts yesterday but haven't we been seeing record highs in the last months. I am sure that it will fall a little more when they ring the bell today but I don't see it to be anything to be overly threatened by unless you are a careless day-trader.

I know that the US and Chinese markets are said to be slowing down but isn't that somewhat of a good thing? What I mean is, weren't those huge numbers really just a "false" high(over-inflated)? Where am I at on this guys? Like I said, I am no expert in this.

Wouldn't it be a good time to start buying say, in the next few weeks when things plane off? I mean for long term investments.

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pedro says on Feb 28, 2007, 05:41:

DG, where are you looking to judge those winners and losers in currencies?

On yahoo, EUR/USD is sitting stable at $1.32. I see absolutely no evidence of any bad sentiment on the EUR or fantastic sentiment on the dollar. Are you just dreaming this?

I am mostly in Euros and I can assure you I am happy and have been happy the last 3 to 4 years. Before you predict doom for me, I am not talking about the future, only the present.

What I do observe right now is the Swiss Franc picking up slightly. I have also read that the Yen is appreciating lately -- didn't look at the numbers for the Yen as I don't watch it.

What you write above, I don't see any evidence there -- none.

que nota!

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southern151 says on Feb 28, 2007, 06:13:

Thanks. I appreciate the insight. All I really have are mutual funds and a couple of IRAs. They really don't feel the strain that the "direct" market does...I think. LOL Either way, My money was there for 9/11 and I survived just fine, eventually. For me, it is not my living for today, it is my future retirement so, I try not to get too nervous when these things come up. It is all on paper and I have no desire to touch it in the coming years so, I think that people like me will be ok...short of another depression. I'll let you know if I am suddenly having to sell my ass on the corner for electricity! LMAO

Hell, who knows? Not me. I am only in my late 20s and according to some at this site, I don't know shit about anything since I am not 30 or over! LOL This is one area that I am admitting ignorance though.

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Brians says on Feb 28, 2007, 06:26:

Looking at the dollar it really didn't rally like I would have liked yesterday. The thing is that emerging market currencies that have account surpluses performed really well. Look at some of these Asian markets that got slaughter yet their currencies appreciated. This is not about China but about liquidity. So I do agree with you DG. Cut off the Yen Trade (Japan supplies 25% of the worlds liquidity) and asset prices fall but currencies of countries with account surpluses rise. Anyway I think that Colombia short term will be trading on stock markets as it is very illiquid. I will wait and hope. However this is the event I have been waiting on. I still have about 6 weeks to make my wire so waiting for some further weakness. Also want to put some money back in the US Stock Market but that is probably a few weeks out as well. This bounce today will be short lived as people re-access risk exposure over the coming weeks. Interesting and happy to be sitting this out:)

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billyb says on Feb 28, 2007, 06:39:

Funny thing how the chinese.... symbols for crisis and opportunity are one and the same ;)

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Brians says on Feb 28, 2007, 07:29:

Currencies are actually simple over longer timeframes it is economics 101. Trade balances should be $0 the people who produce widgeta should make them and people who make widgetsb should make those. However markets are manipulated for expansion of certain countries economies i.e. China. Thus the curriencies which perform will be of countries with surpluses. However short term flight to dollar always seems to be the play as a safe haven. However this is not playing out as aggressivily as I thought. Anyway I have clients long currencies in Asian countries with surpluses (Not Bonds and Stocks) Anyway we'll see how this plays out. At least I feel saver with my clients money there short term. Me I am simple cash except for three little stock I own. I am risk adverse as my money is needed to fund my retirement in Colombia in the next few years. I don't have the stomach for being wrong but will put money back in if I see a good risk/return scenario which is a lot lower on this stock market.

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Waterdawg says on Feb 28, 2007, 08:22:

Thanks DG / Brians Love reading this stuff & Its free ! lol

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cali373 says on Feb 28, 2007, 08:26:

"So China turns the global market on it's back when it says it is going to increase capital gains taxes."

While that may be true I also think that Greenspan's big mouth and citing the "R" while in Hong Kong this week had something to do with it. I think what scared the chinese market was that the U.S. is China's biggest trading partner and if the U.S. enters recession, we will buy less chinese products.

Now even if we include yesterday, overall in the past 12 months the Euro and Yen did better than the dollar. So if you had those currencies you still did better than if you held U.S. dollars yesterday.

Why I do not see a better future for the U.S. dollar:
If more foreign countries start to sell off U.S. dollar denominated treasuries it will lower the value of the dollar.

The Saudi's have already said they will start to sell off U.S. treasuries.

Iran is on the brink of a proposed Oil bourse that would establish Oil trading denominated by the euro. This is not good for the Dollar, since the Dollar enjoys a monopoly on being used to trade Oil.

China owns about a trillion dollars of our debt in U.S. treasury bonds. If they decide to get rid of some bonds, it will cause the value of the dollar to decline. And who knows perhaps the fed will then decide to raise rates (which will slow growth). The Chinese stock markets are indeed Markets, therefore to say that "this is typical China they love to explore, show off what kind of power they have in the world." is a bit simplistic, since collectively the country of china would have to have coordinated the sell off.

I don't think the value of the dollar will tank significantly but slowly and slowly it is losing its reputation as the currency of foreign reserves. Where the Euro is not artificially inflated in value because it is not the sole currency for oil trading.

That being said, I am looking to purchase Gold not Dollars. BUT I really do hope I am way off in my theory of the future value of the Dollar, since my assets are denominated in dollars.

Don, you are right Greenspan has way toooooo much power. He has been the FED chair and is probably very rich. Can't he just shut up. what the hell is it with these people can't they just go away into retirement.

Smile if you are a thinker!

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Brians says on Feb 28, 2007, 08:45:

Cali If we see selling of the dollar then rates here rise as the dollar denominated assets are held in Treasuries. Thus you are right but kind of for the wrong reasons. The Fed will have it's hands tied with the weaker dollar. This would actually be good for the US longer term and is what I expect. However if this scenario happens quickly it will be bad. Thus we need to unleverage these currencies and markets orderly not like yesterday. Greenspan basically came out and said what the investment community has been thinking. That simple. No big impact. Anyway that is why I like Colombia longer term. Not my favotire investment but I think since I want to live there eventually I need to protect against a fall in the dollar. The dollar needs to be weaker. We have too high a standard of living and a weak dollar longer term will make us stronger economically. Right now we are financing our lifestyles with borrowings from surplus nations like China. This way they fund their growth etc.. The Dollar will be weaker longer term but I was hoping that concern about global recessions would add short term strength to the dollar as a safe have and thus an opportunity to move some more money to Colombia. I don't have a crystal ball but if I am wrong about the dollar but still plan to live there it is the safest play for me.

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podborski says on Feb 28, 2007, 09:00:

greenspan is only getting rich now by giving speeches. He was paid something like $126,000 USD a year as fed chairmean (if memeory serves me).

I imagine he makes that per hour now, so expect to hear lots more from him.

He'll only have 'power' if he gives good advice. As soon as he is wrong people will stop listening and paying to listen.

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podborski says on Feb 28, 2007, 09:02:

I'll take you up on that one DG I don´t have a strong opinion on it, but I'm always up for a bet to keep it interesting. Makes you pay attention.

Winner chooses the place. Wine not included as that could get very expensive jaja.

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cali373 says on Feb 28, 2007, 09:05:

Took some time to find but I was able to get more info on the China's capital gains story. It does say that the chinese government was trying to crackdown on investments with borrowed money that would end a rally that drove benchmarks to records.

I do have serious question for those that may know. Is it sustainable to finance a stock market rally with borrowed money?

Smile if you are a thinker!

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Brians says on Feb 28, 2007, 09:13:

Actually I am looking out years on the dollar but your ON. Heck if the dollar rises that dinner only will cost me less anyway:) Another reason to visit Bogota!

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podborski says on Feb 28, 2007, 09:20:

sept 2008? I could be dead by then!

Surely we will find another thing to bet on in early 2008.

Or we can make it a staged bet, first payoff in 2007, second one in 2008.

I'm way too impatient to wait that long for a free meal.

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podborski says on Feb 28, 2007, 14:28:

oh I dunno DG I think interest rates determine a whole lot, in the medium term anyway. I'd pay more attention to interest rates than anything else.

Bloody TV announcers are useless, they know nothing. I once had a client who was head business writer for the biggest newspaper in Canada, the guy didn't understand the inverse relation between bond prices and yields. I had to draw him a freakin picture, literally.

I really don't think they have an agenda, they are just clueless.

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podborski says on Feb 28, 2007, 15:03:

depends what time frame you look at was only a few years ago the yen was at, what, 85? It's very hard to say what JPY/USD should be, or from where you are starting to measure.

But of course all kinds of other factors are involved, like if the central bank is running the printing presses full out, balance of trade, capital flows, etc.

But if you want to keep it simple, all other things remaining the same, money flows to where it earns the highest real return, eventually.

Admittedly, that's crude and not like a math equation can prove it, just my personal experience watching currency markets all these years (I traded currencies for a living for many years).

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cali373 says on Feb 28, 2007, 17:10:

"the guy didn't understand the inverse relation between bond prices and yields."

That is pretty bad considering its ECON 101. But remember the goal of the media regardless whether left or right, is to instill fear in the psyche of mainstream america.

Smile if you are a thinker!

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JMCana says on Mar 1, 2007, 05:10:

Media and Golf While I cannot speak for all of the media, I can address the little bit I have been involved in. I know that sometimes I have written an article and the whole thing got changed by either the sales department of the media moguls while playing golf, or at the club, etc. When finished by the editor, I did not recognize my own writing. I can tell you that there is much spin doctoring going on with the press from the perspective I saw when working with it.

Thank goodness for the internet and people like many of them here on this blog site. Thanks for the info guys.

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Brians says on Mar 1, 2007, 05:55:

Pounding the futures this morning DG as much as I agree with you about the carry trade I do believe it is fine. Outside of some unforeseen event the trade will be there but is getting old in the tooth. The fear of an unwinding of the carry trade and a liquidity crisis is what is concerning the market. Also notice that the sub-prime market default have seem to have spread to prime. Again probably fine as what the markets are doing is pricing in worst case scenarios in it's mind. Market will find a bottom when the CBOE VIX hits mid 20s. I sold my accounts when it was trading at historic lows. Left a couple points on the table but look good now. Once again unless there is an actual major event (I put at 20% probability) this is a market putting a fear discount in it. This is not about Hedge Funds this is about liquidity and little house wifes buying Emerging Market Bonds of countries they don't know the names nor where they are located. Fear needs to wash this money out. Emerging Market Bonds should not be trading at 1.5% about Treasuries. No risk priced into any of these investments.

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Brians says on Mar 1, 2007, 06:17:

DG BOJ raised rates last week. The spreads are still there. The issue is a lot of Hedge Funds use Hedges. However if we have a perfect storm i.e. rates rise in USA on 10 year then no assets work and these hedges don't work either. Thus then we would see an unwinding. Like I said an unforseen event. Outside of us seeing that event which I still have at 20% the trade is still fine. Events occur when hedges come undone. China is a mico market. Only 4% of money invested is from outside of China. Not even a blip on the screen. Stocks have no impact on househod balance sheets in China thus no impact on GDP. This is pricing in risk and should be quick. However if there is an event like 1997 then we will have to take this down 10% from these levels. I will wait and watch.

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Brians says on Mar 1, 2007, 06:26:

BTW Yen 116 will cause a lot more concern and unwinding on the carry.

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podborski says on Mar 1, 2007, 11:44:

the media are biased to the left as all their college professors were biased that way too, so they just follow along never thinking for themselves (so it seems to me).

Out of probably 40 professors I had at 3 universities over 7 years I had ONE that was not a flaming lefty, (except maybe the odd math prof and politics never came up so who knows?)

I just don't buy into ANY kind of theory that 'they' wanted something to happen or 'they' are trying to spread propaganda. But it seems that way as the natural inclination for all these journalists is to believe money is evil, profit is evil, success is evil, big is evil...therefore the USA is evil.

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podborski says on Mar 1, 2007, 11:46:

a really good example of Europe VS the USA is Airbus VS Boeing, don't you think?

Guess who is winning that one?

Perfect microcosm of two styles of gov´t/business.

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podborski says on Mar 1, 2007, 13:26:

and the Airbus workers response to the company's troubles?

Why, stop work and stage a big protest of course!

Years ago I got a good laugh while skiing with an instructor and a group of people from all over europe. About 3 italians didn't show up for the class (which was paid for as part of an all inclusive package), and the instructor asks 'where are they?' and the one italian who did show up yells 'on strike!'

At least they can laugh at themselves, jaja.

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aztec says on Mar 1, 2007, 13:58:

DonGringo, if the French gain... ...control in Brussels then all bets are off for EU. Down hill from there!

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