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Dollar may be done here - Be careful

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Almost, two months old and USDX is significantly lower now

 

Absolutely...Contrarian indicators should never be used as a market timing device, in my humble opinion. I always think it is best to combine as many non-correlated methods, and to have these in agreement first before acting. For example, there is no point using an RSI indicator and a Stochastics and CCI on one chart. It might look good, but they all really just tell you about market breadth...

 

Better to use, market breadth, trend, cyclical, sentiment, chart patterns, elliott wave, statistics, fundamentals... I m not advocating any of these methods over another. The point is that they are non-correlated. Of course it would be too difficult to use all methods, perhaps having 3-4 non-correlated methods in agreements is better. However there is no magic number. At the moment, we have support, areas here, we have sentiment so bearish, we have over valued assets in stocks, real estate which should really correct which is USD bullish, we have indicators of market breadth showing over sold...What we don't have is a change in trend yet...so for me this would the important part which is needed to change sentiment, or which will show short covering and a move up.

 

UK property was overvalued in 2005, I mean it was easy to see then, yet it moved up for 2 more years. The NASDAQ was over valued in 1997, yet rose another 2 years to unbelievable levels.

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Absolutely...Contrarian indicators should never be used as a market timing device, in my humble opinion. I always think it is best to combine as many non-correlated methods, and to have these in agreement first before acting. For example, there is no point using an RSI indicator and a Stochastics and CCI on one chart. It might look good, but they all really just tell you about market breadth...

 

Better to use, market breadth, trend, cyclical, sentiment, chart patterns, elliott wave, statistics, fundamentals... I m not advocating any of these methods over another. The point is that they are non-correlated. Of course it would be too difficult to use all methods, perhaps having 3-4 non-correlated methods in agreements is better. However there is no magic number. At the moment, we have support, areas here, we have sentiment so bearish, we have over valued assets in stocks, real estate which should really correct which is USD bullish...What we don't have is a change in trend yet...so for me this would the important part which is needed to change sentiment, or which will show short covering and a move up.

 

UK property was overvalued in 2005, I mean it was easy to see then, yet it moved up for 2 more years. The NASDAQ was over valued in 1997, yet rose another 2 years to unbelievable levels.

 

I understand we are allowed to use +1's in the absence of 'good post' buttons.

 

 

+1

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Notice, it's only scubadiving, so it can't stay submerged for long, right? Right?????

That's a snorkel. Depth is limited but time less so.

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US Dollar Crashes Through Major Support Level

Posted: Oct 14 2009 By: Dan Norcini Post Edited: October 14, 2009 at 12:51 am

 

Dear Friends,

 

This evening in Asian trade, the Japanese Minister of Finance once again restated the new view out of Japan that the level of the Yen is no longer an obsession with the monetary authorities of that nation. His comments were interpreted by the Forex markets that intervention to stem the advance of the Yen is most unlikely. With that, market participants wasted little time bidding the Yen into a strong advance.

 

Those statements of his, combined with that of Federal Reserve Vice Chairman, Donald Kohn, that the US economy would not experience a quick or sharp recovery out of its recession, were both read by traders that US interest rates were not going anywhere anytime soon. Carry traders then beat the Dollar down below critical support near the 76 level on the USDX as they rushed into higher yielding currencies such as the Aussie and Loonie. The Euro also shot up to another new yearly high.

 

It is looking more and more like the current Administration has set on a course of deliberate destruction of the US Dollar and with it, the economic might that the US has enjoyed since post World War II. As said many times on the pages of this web site, the profligacy of the US has inescapable consequences and we are now seeing a rapid acceleration of the same. The fall in the Dollar is picking up momentum and that is why we are witnessing gold moving into new highs.

 

But gold is more than a Dollar phenomenon – Gold priced in terms of British Pounds and in Euros is relentlessly moving higher as both Great Britain and Europe, the fading West, are debasing their currencies as well.

 

Protect yourself from the theft of your wealth by these conscienceless politicians and monetary officials for they have sold their citizenry down the river and plundered them in the process far more thoroughly than Attila and his army of Huns ever did to Rome of old. At least the Roman inhabitants were aware of the rape and pillaging of their substance – when the general public finally awakens to the despicable looting of their treasures by these reeking buzzards, they will rush into gold with a fury that will shock even many of the readers of this site.

 

 

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Yawwnnn

 

For 2 quarters of last year USD was lower than 74.

 

This talk of it collapsing is becoming tiring and is premature. Anybody can say something has fallen by say x% since its peak, and be alarmist without comparing it to the % rise to that peak in the first place.

 

For example, USD increased by some 30% from August 08 to March 09, but yet it has only fallen 17% since. So it has some way match don't you think?

 

There were lows of spring to summer 08 when it channelled at 71 to 74. How come very few mention that we haven't got near them yet?

 

Gold bugs shouldn't start scaremongering until that support channel is broken which could take several months, if at all. Personally I will start monitoring it if it breaks 74.5. If it gets near and breaks down through 71 we have a problem. Until then, I'm sorry, but nothing will undermine the reserve currency this quickly. Indeed quite the opposite, I suggest that we will see USD gain strength when it reaches the lower channel. My guess is this will co-incide with EMs correcting sharply and spot gold will correct by some 20%. (ouch...don't worry long term I see over $1500)

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Here's the graph that was attached to the post above, to cheer you up even more :lol:

 

Click the image to open a pdf file.

 

USDollaroctober1320091.jpg

 

 

 

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Prechter is bearish too (but I guess he's not too highly respected as a pundit - hasn't he been bearish on gold for yonks?)

 

http://www.forbes.com/feeds/reuters/2009/1...W-UPDATE-1.html

It can be summed up that deflationists are bullish the dollar and inflationists are bearish.

 

I fail to understand how anyone can be bullish on the dollar when the FED are buying so much of their own debt with freshly printed dollars. Maybe someone can explain that to me.

 

 

 

 

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It can be summed up that deflationists are bullish the dollar and inflationists are bearish.

 

I fail to understand how anyone can be bullish on the dollar when the FED are buying so much of their own debt with freshly printed dollars. Maybe someone can explain that to me.

 

I'm an inflationist and I am bullish the dollar, but only against GBP! :lol:

 

At the end of the day it PMs Vs Fiat...Real World Vs Banker's Reality

 

 

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I'm an inflationist and I am bullish the dollar, but only against GBP! :lol:

 

At the end of the day it PMs Vs Fiat...Real World Vs Banker's Reality

I suppose you could call me bullish too ;)

 

 

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It can be summed up that deflationists are bullish the dollar and inflationists are bearish.

 

I fail to understand how anyone can be bullish on the dollar when the FED are buying so much of their own debt with freshly printed dollars. Maybe someone can explain that to me.

 

If you take all those USD (in the form of credit) that were created through the US banking system, and packaged up into all sorts of derivatives, like MBS, CDO's, and many other structured credit products, it was credit that bid up house prices, was used to buy cars, enabled the current account deficit to grow, helping to drive up demand for commodities etc etc...When it became apparent that all these USD would not be payed back and assets started to fall, all that credit was destroyed...all those jumbo mortgages, ALt-A's, option arms, subprime that will never be payed back, car loans going bad, credit card defaults, commercial real estate, business loans will never be payed back. Those USD that were once believed to be there are being destroyed at an alarming rate. In the trillions. The FED have not offset this.

 

I still believe we will get inflation, currency problems as printing money always goes somewhere...remember Japanese low interest rates were inflationary in a global sense in the carry trade...So an ultra easy FED will lead to global inflation in the longrun, or stagflation most likely...However, what the market is telling us is that we are not near that stage yet. Since June yields on the ten year T-Bond have went down from about 3.90% to 3.20% last week...The bond markets seem to be lining up for deflation...

 

Also this rise in gold could be a sign or a warning of credit problems, or some as yet unseen event that will appear to come from nowhere...

 

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http://jsmineset.com/2009/10/14/what-more-is-there-to-say/

What More is There to Say?

Posted: Oct 14 2009 By: Jim Sinclair Post Edited: October 14, 2009 at 6:32 pm

 

Dear CIGAs,

 

We can keep you updated on developments and Trader Dan can keep you updated on technical matters as the drama in gold will never end.

 

The dollar is headed for much bigger trouble quite soon.

 

Gold is going to $1224, $1650 and then on to Alf’s numbers.

 

The US dollar will touch its past low, fight a bit, but then give it up to the carry trade and fundamental economics.

 

All we have warned you of is happening now.

 

The countdown of days needs to be understood as a countdown for just what is happening. That countdown is to the faltering of a major area of dollar support becoming invalid as the carry trade monster devours any currency it adopts.

 

Interest rates cannot be raised to favor the dollar without throwing the MOPE recovery directly into the circular file.

 

Confidence in the dollar is waning with every passing day. As Armstrong has told you, one day soon confidence will simply implode.

 

This is a product of a lifetime of mistakes of which no one person can be considered the author. It is the sum of wrong economics, rewarding activities that produce nothing but paper shuffling, and punishing activities that produce goods, human services and employment.

 

Within one week of the countdown the dollar will take out areas expected to be the bottom of this decline by many talking heads today. That is a dynamic event as was what Trader Dan spoke of here on JSMineset last evening.

 

What has occurred are the things that economic history is made of> Few outside of Trader Dan and the most attentive CIGAs were really shaken by the occurrence.

 

This is what the countdown is all about. Look out the window and see it happening. It is history in the making but no more than what happened yesterday at lower levels.

 

The end is NOT coming. It has already happened. Are you insulated from the results thereof?

 

Sincerely,

Jim

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Absolutely...Contrarian indicators should never be used as a market timing device, in my humble opinion. I always think it is best to combine as many non-correlated methods, and to have these in agreement first before acting. For example, there is no point using an RSI indicator and a Stochastics and CCI on one chart. It might look good, but they all really just tell you about market breadth...

 

Better to use, market breadth, trend, cyclical, sentiment, chart patterns, elliott wave, statistics, fundamentals... I m not advocating any of these methods over another. The point is that they are non-correlated. Of course it would be too difficult to use all methods, perhaps having 3-4 non-correlated methods in agreements is better. However there is no magic number. At the moment, we have support, areas here, we have sentiment so bearish, we have over valued assets in stocks, real estate which should really correct which is USD bullish, we have indicators of market breadth showing over sold...What we don't have is a change in trend yet...so for me this would the important part which is needed to change sentiment, or which will show short covering and a move up.

 

UK property was overvalued in 2005, I mean it was easy to see then, yet it moved up for 2 more years. The NASDAQ was over valued in 1997, yet rose another 2 years to unbelievable levels.

 

Good post, especially the point about using un-correlated indicators.

 

I find it interesting that we are seeing this push up right after so many October "Crash Calls".

Is this the final push that converts the Bears to Bulls? If so, i shall not be amongst the converts.

I am considering adding to my Puts tomorrow.

 

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It can be summed up that deflationists are bullish the dollar and inflationists are bearish.

 

I fail to understand how anyone can be bullish on the dollar when the FED are buying so much of their own debt with freshly printed dollars. Maybe someone can explain that to me.

 

When everyone goes on one side of the boat,

It is time to get on the other side.

 

Absolutely...Contrarian indicators should never be used as a market timing device...

I see your point: When sentiment becomes overwhelmingly Bullish, it can stay that way for a long time.

We have various cyclical and wave indicators that have been flashing warnings for weeks.

 

For example, my Swing Indicators suggested a Swing down, but that turned into a mere pause,

and now we are seeing a (weak) continuation of the Inflationary upswing.

 

Stronger buying volume, and Institutional buying are needed to give this thing more legs IMHO

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If you take all those USD (in the form of credit) that were created through the US banking system, and packaged up into all sorts of derivatives, like MBS, CDO's, and many other structured credit products, it was credit that bid up house prices, was used to buy cars, enabled the current account deficit to grow, helping to drive up demand for commodities etc etc...When it became apparent that all these USD would not be payed back and assets started to fall, all that credit was destroyed...all those jumbo mortgages, ALt-A's, option arms, subprime that will never be payed back, car loans going bad, credit card defaults, commercial real estate, business loans will never be payed back. Those USD that were once believed to be there are being destroyed at an alarming rate. In the trillions. The FED have not offset this.

 

I still believe we will get inflation, currency problems as printing money always goes somewhere...remember Japanese low interest rates were inflationary in a global sense in the carry trade...So an ultra easy FED will lead to global inflation in the longrun, or stagflation most likely...However, what the market is telling us is that we are not near that stage yet. Since June yields on the ten year T-Bond have went down from about 3.90% to 3.20% last week...The bond markets seem to be lining up for deflation...

 

Also this rise in gold could be a sign or a warning of credit problems, or some as yet unseen event that will appear to come from nowhere...

You are very wrong in that the FED has kept this credit from being destroyed by buying it at full price from the banks, with freshly created money. I agree the mortgages will never be paid back, but a high percentage are now on the FEDs books not the banks. So the debt that is going into default and causing problems is actually being bought at full price with newly created money. That is inflationary because the debt is not be allowed to default, instead it is being bailed out with even greater debt and buried in the FED books. Which is why the dollar is losing strength and the stock market is increasing. Those dollars that are being devalued in the trillions are not in the hands of the banks anymore, they are in the FEDs, they are even talking about still buying more. SO THE FED HAS OFFSET THAT.

 

The FED are also creating a new dollar carry trade, with dollars being borrowed and the money being put into things like gold. It all comes down to weather the FED will raise interest rates IMO, which I don't think will happen.

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When everyone goes on one side of the boat,

It is time to get on the other side.

 

 

I see your point: When sentiment becomes overwhelmingly Bullish, it can stay that way for a long time.

We have various cyclical and wave indicators that have been flashing warnings for weeks.

 

For example, my Swing Indicators suggested a Swing down, but that turned into a mere pause,

and now we are seeing a (weak) continuation of the Inflationary upswing.

 

Stronger buying volume, and Institutional buying are needed to give this thing more legs IMHO

 

You make agood point here Bubb.

 

I am thinking the banksters are looking at how to make the slogan "We beleive in a strong dollar policy" come true. If they are sucessfull in engineering a new carry trade where the USD stays at ZIRP, and say the AUD becomes the other currency in the carry trade pair, then Australia as a resource rich country will see it's currency decline (and the resources it provides will also be down). Two goals for the price of one.

 

This may appease China and India who still have some way to go to fully develop their infrastructure. This rise in the POG may have just been a warning shot over the bows of USS Dollar, to say if you hurt us (by trashing our savings) we will hurt you.

 

On the other hand, this could be it! I wish I knew, but for now I am playing this as a volatilty trade and have pending orders either side of the 'ship'.

 

 

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When everyone goes on one side of the boat,

It is time to get on the other side.

 

 

I see your point: When sentiment becomes overwhelmingly Bullish, it can stay that way for a long time.

We have various cyclical and wave indicators that have been flashing warnings for weeks.

 

For example, my Swing Indicators suggested a Swing down, but that turned into a mere pause,

and now we are seeing a (weak) continuation of the Inflationary upswing.

 

Stronger buying volume, and Institutional buying are needed to give this thing more legs IMHO

Far from everyone is on one side of the boat, the majority seem to be expecting a crash and are going short or buying puts, the investment market almost seems split 50/50 as to what will happen next.

 

I believe it is more important to stay on the side of the trend in these times than to try and second guess the market. How can anyone really know what is going to happen next with so much money being created, banks being bailed out and the ZIRP. Or do you think the FED will abandon it's zero interest rate policy, that is the decider IMO.

 

The trend is your friend.

 

 

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Here's the graph that was attached to the post above, to cheer you up even more :lol:

 

Click the image to open a pdf file.

 

USDollaroctober1320091.jpg

 

 

Which makes my point precisely about the excitement at something when we haven't even broken last years lows.

 

Stop the hysterical chat until we do please.

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Which makes my point precisely about the excitement at something when we haven't even broken last years lows.

 

Stop the hysterical chat until we do please.

No hysterical chat here just facts, there has been some hysterical chat coming from the disgruntled bulls though.

 

In case you forgot;

 

http://www.greenenergyinvestors.com/index.php?showtopic=7880

 

 

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DOUBLE POST

http://www.bloomberg.com/apps/news?pid=206...id=a_A5nqmw9Dq8

Dollar to Hit 50 Yen, Cease as Reserve, Sumitomo Says (Update1)

 

By Shigeki Nozawa

 

Oct. 15 (Bloomberg) -- The dollar may drop to 50 yen next year and eventually lose its role as the global reserve currency, Sumitomo Mitsui Banking Corp.’s chief strategist said, citing trading patterns and a likely double dip in the U.S. economy.

 

“The U.S. economy will deteriorate into 2011 as the effects of excess consumption and the financial bubble linger,” said Daisuke Uno at Sumitomo Mitsui, a unit of Japan’s third- biggest bank. “The dollar’s fall won’t stop until there’s a change to the global currency system.”

...

“We can no longer stop the big wave of dollar weakness,” said Uno, who correctly predicted the dollar would fall under 100 yen and the Dow Jones Industrial Average would sink below 7,000 after the bankruptcy of Lehman Brothers Holdings Inc. last year. If the U.S. currency breaks through record levels, “there will be no downside limit, and even coordinated intervention won’t work,” he said.

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Investor Sounds Alarm on Hyperinflation - 14/10/09

 

The headline from the Bloomberg News internet site Bloomberg.com said it all, “U.S. Inflation to Approach Zimbabwe Level, Faber Says.” But while Bloomberg was running the story, the main stream media (MSM) didn’t touch it.

 

Faber is the legendary Marc Faber, who publishes the Gloom, Boom & Doom Report. He said in an interview with Bloomberg Television in Hong Kong, “I am 100 percent sure that the U.S. will go into hyperinflation. The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”

 

Zimbabwe’s inflation rate reached 231 million percent in July, 2008, the last annual rate published by the statistics office.

 

To put that into perspective, inflation in the U.S. in 1979 reached a high of 13.5 percent. That alone was a 500 percent increase above the 70-year average 2.5 percent, and those of us who were alive back then remember just how uncomfortable 13.5% inflation could be.

 

We’ve been warning for a long time on Personal Liberty Digest and in The Bob Livingston Letter that Fed policies were sending us on a path toward inflationary destruction. And we’re not alone in this thinking. But the MSM and the boys and girls in government don’t want you to know about it.

 

Why? Because they don’t want you know that for almost 100 years now they’ve been silently, stealthily stealing your wealth.

 

It started in 1910 when a group of powerful bankers met in secret at Jekyll Island, Ga., and created a monster, then pushed Congress to grow that monster—the Federal Reserve. Founded in 1913, the Fed is a non-Constitutional cartel of private bankers that has control over the U.S. monetary system.

 

Since then, the Fed’s policies have caused a gradual devaluation of the dollar that has siphoned off the wealth of millions of Americans. Ever wonder why things cost so much more today than they did 40 or 50 years ago? That’s US monetary policy in action.

 

For example, in 1933 the Consumer Price Index (the price of a basket of common goods purchased by the average consumer) was 12.8. In 2008 the same CPI was 225. In other words, that same basket of goods has increased from just under $13 to $225. That’s the result of your devalued dollar.

 

But to call this “petty theft” would almost be an insult to the masterminds at work here. To the contrary, there are a number of reasons why the powers that be prefer inflation as a policy…

 

Here’s what noted economist Peter Schiff wrote in his book, Crash Proof, which predicted the financial meltdown, when he detailed why the government likes inflation:

 

Inflation makes the national debt more manageable because it can be repaid with cheaper dollars.

In a democracy full of personally indebted voters, the government will pursue monetary policies hospitable to debtors even as it accommodates the special interests that lend to them.

Inflation finances social programs that voters demand while allowing politicians to avoid the politically unpopular alternative of higher taxes, enabling Uncle Sam to play Santa Claus.

Inflationary spending is confused with economic growth, which is confused with economic health. (Of course, GDP numbers are theoretically adjusted for inflation but that doesn’t mean much if the inflation figures are misrepresented.)

Inflation causes nominal asset prices to rise, such as those of stocks and real estate, instilling in the minds of voters the illusion of wealth creation even as the real purchasing power of their assets falls.

 

Back to the Bloomberg story: Federal Reserve Bank of Philadelphia President Charles Plosser was quoted as saying that inflation may rise to 2.5 percent in 2011.

 

But the head of Asian economic forecasting at Action Economics in Singapore said he was confident that the Fed would be able to contain inflation at 2 percent or less.

 

Meanwhile, the Fed, Keynesian economists and MSM ignore history. They ignore Zimbabwe, which got into its mess by printing money to pay down its debt. They ignore 1970s America. And they ignore Weimar Germany in 1918-1923, where hyperinflation and deficit spending caused 30,000 percent inflation and led to the collapse of their civilization and the rise of Adolf Hitler.

 

The government boys and girls don’t want you to understand inflation, and the MSM is not going to report it until it can’t be ignored. Meantime, you ignore it at your own peril.

 

What can you do? First, call your Congressman and Senators and urge them to get behind HR 1207, which calls for an audit of the Federal Reserve.

 

Second, buy and hold gold and silver. Because when hyperinflation comes, precious metal is the only thing that will stand between you and financial hardship.

 

Sincerely,

 

Bob Livingston

Guest Contributor

 

 

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You are very wrong in that the FED has kept this credit from being destroyed by buying it at full price from the banks, with freshly created money. I agree the mortgages will never be paid back, but a high percentage are now on the FEDs books not the banks. So the debt that is going into default and causing problems is actually being bought at full price with newly created money. That is inflationary because the debt is not be allowed to default, instead it is being bailed out with even greater debt and buried in the FED books. Which is why the dollar is losing strength and the stock market is increasing. Those dollars that are being devalued in the trillions are not in the hands of the banks anymore, they are in the FEDs, they are even talking about still buying more. SO THE FED HAS OFFSET THAT.

 

The FED are also creating a new dollar carry trade, with dollars being borrowed and the money being put into things like gold. It all comes down to weather the FED will raise interest rates IMO, which I don't think will happen.

 

Don't get me wrong, I own gold and silver, and I m not USD bullish in the longrun. My view is that a USD rally is coming in the short/medium term, assets will move down, and the FED will print more money. The facts are that the banks are holding reseves on their balance sheets, and consumer and commercial credit has fallen. It would take banks and a willing borrower to spend this money, hence increasing money velocity to bid up prices to the levels we have seen before. Right now the money multiplier has plunged, and all measures that were positive and correlated with the inflation between 2003-2007 are now negative. Namely, commercial lending, consumer credit, and the money velocity. Also, what do you know that the bond market does not. The USD is in a downtrend for sure, however a rally in the USD would not be a surprise, and it would actually correlate with the fundamentals. I prefer these days to look at what the market is doing, not what we think it should be doing.

 

We hear all these USD bears right now, central bank officials and nations saying the USD will decline. There is alot of USD bearishness out there. If you believe that markets are in anyway half efficient, then this should be priced into the USD and in many ways this should cause a collapse in the USD...so one ask does the market really believe this?

 

I also agree with the USD carry trade...however caveat emptor number 1. We had the JPY carry trade...when carry trades unwind the carry funding currency can becomes incredibly strong as asset markets reverse course.

 

Again, the USD is going to be weak in the future, and all this printing will lead to global inflation...however, if that was imminent bond yields would be rising and not falling.

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