User 143167

Dollar-Equity Correlation: Roubini's Got It Wrong (Again)

There is huge leverage going on this year, not through the brokers marginal accounts, but from the government, and I am not just talking about the US government. Every government is trying to load private debts on their own balance sheet and finance that with new bills printed (which are debts).

As a whole, there is HUGE releveraging in the world now, not deleveraging.

The Dollar's Decline is Slowing Down

So stupid. As far as I know, the country with its people holding most of the dollar assets are the US. If the dollar becomes worthless, it will be the American people who get hurt most.

Weak Dollar Has Yet to Affect Import Prices

oil price was generally flat in September(thanks to the trading regulation of CFTC), so will import prices be. But if the dollar continues to plunge, you will see a much quicker import price inflation in the next a few months.
Inflation is evitable if the Fed did not abandon its current policies.

Declining Dollar: The Markets' Take

If the US has a double dip, the dollar will go UP, not down.

The dollar does not trade on macro economies, but on market risk appetites.

Negative Interest Rates Aren't a Solution to the Crisis

If the Fed officially carries out a negative interest rate policy, the 0% real yield gold will be over $3000 in a blink of eye.

Valuations Ahead, Not Behind

$74 on 2010 is too good to be true. The highest S&P500 earnings were around $90, with 35 from the financials and 55 from others. The financials will have only half of their best earnings in 2010, that is $18, so the non-financial earnings have to be $56 to make it $74, which means the non-financial operating earnings will make a historical new high in 2010! Day dreaming!

Low Inflation Concerns to Serve as a Launching Pad for Stocks

The headline CPI at the year end with current oil price unchanged will be 3%. If the Fed does not do anything, the negative real yield will soon make itself into an asset bubble and inflation by releveraging.

Is the Recession Really Over?

The recession is over. We are now heading for stagflation, which would be ended by another even deeper recession in 2011.

Inflation Expectations and the Price of Hedges

In a slavery economic system, you can keep the labor cost low and stable almost for ever as long as slaves are enough. So according to your logic, its government will never face the problem of inflation right? However, the history never suggested so.
So I think inflation or even hyperinflaiton can actually emerge with labors negotiation power being very low.

Writing CDS on U.S. Government Debt: What's the Point?

No, it is not speculating. The US government debt CDS is priced in Euro. Its meaning is quite clear, even though the government can always avoid a default by monetarizing its debts, its currency will have to devaluate as a result. If the government thinks the risk of the consequency of a currency plunge is larger than a debt default, it may eventually choose to default (like Russians did in 1998). Either way, you get protected by CDS contracts denominated in a foreign reserve currency like Euro.

Bears Might Miss a Remarkable Recovery

If your argument about disinflation helping purchasing power is true, you should see the US consumers' purchasing power at its peak in depression, didn't you?

Oil Spike Drags Market Along

The drop of crude inventory of 8.4mm barrels was only due to a drop of crude oil imports of exactly 8.4mm barrels last week. That means the final demand for oil was basically unchanged. However, the stupidity of the market always amazes me as people simply attribute the drop to the rising demand.

Jeremy Grantham on Speculative Rallies, Fair Value and Overheating in China

The Chinese GDP numbers are for real, mostly. The problem is that GDP does not represent wealth formation. The way China builds up its GDP by fixed asset investment is to " build one road, destroy it, repair it, then destroy it again, and finally build it again". This will boost the GDP numbers, but not good in wealth formation.

A big portion of China's GDP are ineffective and just serve to create jobs. The alternative is to build a 100million army to employ all those jobless workers, but that will upset the western world. Therefore, 8% growth is a MINIMUM in China to keep unemployment from rising in the next decade, after that, Chinese population peaks and the economic growth will slow down naturally.

The Recession Is Already Behind Most Business Sectors

If you are true, you will see the world of $200 oil by 2010. Welcome back!

'The Fed's Exit Strategy': Duh

Bernanke is avoiding the hardest question, what will he do if both unemployment and inflation rates are high, a.k.a stagflation scenario, which is a checkmate to him.

So his strategy is simple avoiding talking about it. Otherwise, the Fed will have no problem to drain the liquidity if the economy and employment are strong.