http://m3financialsense.blogspot.com/2011/08/negative-yield-selling-in-dollar-and.html
I expected an overall move towards weakness in both the dollar and equities. That has occurred. I expected an overall move towards negative yield in US Treasuries and we have made that huge leap, one which should not be taken lightly, to ultimately enable the US to fund deficits and borrowing with negative yielding Treasury bonds in a much mroe significant way that most may be expecting. As I have indicated before, as people begin looking for return of their money as opposed to return on their money we will likely get a huge boost to the reserve status of the US Dollar...much to the chagrin of people who do not understand that Gold is not money, Silver is not better than gold and Real Assets are of little value whem people don't have the purchasing power to obtain them.
Ultimately, the real question is, "Who can be trusted to give you your money bacK?". Can China be trusted to give you your money back? Can the European Union? Russia? South America? Well, there you have it, the only country willing able and practically capable of returning your money of that set is the US. China may seem credible enough, but in a credit contraction, they are seriously over extended and additionally have been secretly buying tons of Treasuries while promoting the exact opposite. They do not want their own money in their own currency or country for that matter...and neither would I want my money in China if I thought I might be concerned with the very basic issue of a transactional return of said money. I am rather sure that Mr. Putin for all his recent remarks has most of his money in US Treasuries too.
I think that we are on track to see the dollar index to move lower to the lower 70 or 69's and I think that we will see continued weakness in risk assets. I also think the EURO will likely make it toward the upper 1.40's. I also think that these instruments will setup massive trades when they do. In addition, the Silver and Gold market will likely setup catastrophic reversals - which I will likely once again short.
There certainly is the possibility that the dollar continues straight up from here...but I think that its overall action and the EURO's states to the contrary today. The EURO has made a symmetrical zig-zag retracement that held firm today. Additionally, it is important to understand the macro flows here. Many large institutions and significant market participants do not understand the macro events that are going on...they are using the EURODOLLAR interest rate contract to trade yields, however, those trades are failing miserably, in some cases catastrophically, and causing a significant liquidity issue. This issue will likely continue into the near future and exacerbate conditions that are underpinning the futile and ridiculous blow off moves - up in the EURO and down in the Dollar.
Meanwhile, back at the ranch, can anyone get more out of touch than our leaders in Washington DC? Obama and Boehner clearly do not understand economics...
I expected an overall move towards weakness in both the dollar and equities. That has occurred. I expected an overall move towards negative yield in US Treasuries and we have made that huge leap, one which should not be taken lightly, to ultimately enable the US to fund deficits and borrowing with negative yielding Treasury bonds in a much mroe significant way that most may be expecting. As I have indicated before, as people begin looking for return of their money as opposed to return on their money we will likely get a huge boost to the reserve status of the US Dollar...much to the chagrin of people who do not understand that Gold is not money, Silver is not better than gold and Real Assets are of little value whem people don't have the purchasing power to obtain them.
Ultimately, the real question is, "Who can be trusted to give you your money bacK?". Can China be trusted to give you your money back? Can the European Union? Russia? South America? Well, there you have it, the only country willing able and practically capable of returning your money of that set is the US. China may seem credible enough, but in a credit contraction, they are seriously over extended and additionally have been secretly buying tons of Treasuries while promoting the exact opposite. They do not want their own money in their own currency or country for that matter...and neither would I want my money in China if I thought I might be concerned with the very basic issue of a transactional return of said money. I am rather sure that Mr. Putin for all his recent remarks has most of his money in US Treasuries too.
I think that we are on track to see the dollar index to move lower to the lower 70 or 69's and I think that we will see continued weakness in risk assets. I also think the EURO will likely make it toward the upper 1.40's. I also think that these instruments will setup massive trades when they do. In addition, the Silver and Gold market will likely setup catastrophic reversals - which I will likely once again short.
There certainly is the possibility that the dollar continues straight up from here...but I think that its overall action and the EURO's states to the contrary today. The EURO has made a symmetrical zig-zag retracement that held firm today. Additionally, it is important to understand the macro flows here. Many large institutions and significant market participants do not understand the macro events that are going on...they are using the EURODOLLAR interest rate contract to trade yields, however, those trades are failing miserably, in some cases catastrophically, and causing a significant liquidity issue. This issue will likely continue into the near future and exacerbate conditions that are underpinning the futile and ridiculous blow off moves - up in the EURO and down in the Dollar.
Meanwhile, back at the ranch, can anyone get more out of touch than our leaders in Washington DC? Obama and Boehner clearly do not understand economics...
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