odin

Trading the 'Theme du Jour'

While fashions du jour change rapidly, it seems to me the short dollar crowd is touching the elephant trunk and calling it a snake. My big question to the $-fall over the medium term is: against what? MM has answered it in the short-run: against everything else but it makes little sense over the long run.

We talk of Fed $-printing. Arent the Chinese doing the same thing at a much more accelerated and an even more unsustainable pace?

Against gold because of inflation? But are wages going up? Unemployment going down? (i actually believe employing will be a a leading rather than a lagging indicator in this cycle) Re-leveraging into asset speculation is no inflation. That is the only recovery I see and likely to end up the same way as the earlier experience -- in tears.

The Chinese have NO choice but to buy dollars if they wish to keep employment levels remotely close to where they are. Even small economies dont turn on a dime, let alone the worlds 2nd largest suddenly turning its export-focus and promoting domestic consumption in a short time-frame. Repatriating physical gold, jawboning about dollar worries are just that -- noise.

I would not be surprised if DXY ended the year in the mid-80s. If ever the world gets back to full productive capacity and near-full employment levels AND the central banks all over the world keep easy money policies that result is more than just asset bubbles (especially widespread shortages in food and energy), then and only then will I worry about high inflation (and invest not in gold but in those commodities and the equities of companies that produce/service them).

However, I cant put weight scales in the voting booth and am content to stay on the sidelines through these rallies.