dtblount

How to Profit from Possible U.S. Credit Downgrade

The opening paragraph was enough for me to stop there...First off, UK debt was not downgraded last week...S&P revised the OUTLOOK from "stable" to "negative." This is very different from a credit downgrade. Also, saying that the US and UK have "similar policies" because you feel they are "spending too much money" is very shallow-minded.

Why These Currencies Will Benefit from China's Commodities Purchases

AUD still has room to climb vs USD and especially vs JPY. In terms of currency plays that benefit from China's demand of commodities, I like AUD, NZD, CAD, and NOK vs USD and JPY.

Four Good Reasons to Sell the Euro

Great analysis and I agree 110%. Taking your 3rd point a bit further, the credit exposure to emerging Europe has yet to take full effect on the eurozone and EUR...especially with some recent headlines I've seen regarding "shortcuts" to EUR membership, which will just magnify the ECB's blanket rate decision dilemma. The IMF might be able to provide a backstop for some of these economies, but not without some bloodshed and a weaker EUR.

Short EUR vs anything, especially USD or JPY, is quite tricky though...since commodity prices, Xfer pricing/corporate FX, and the daily ebb and flow of equities (and a jittery VIX) can really add to short term volatility in chasing long term views.

Beware the UN's FX Views

Great article with some excellent views that cut through a lot of the rhetoric...very well done!

As for the UN, I respect and admire its goals (especially those regarding poverty reduction, etc.), but take issue with the attempts at executing many of these goals and the viability of the strategies used. It seems as if the UN has phased into more of a large think tank, capable of conjuring up interesting ideas and hosting elaborate summits with impressive attendees, but lacking in successful projects. I guess that's what happens when you crowd so many academics into a room...

The idea of China lending only in CNY, which is neither a reserve nor a free-floating currency, does not make any sense in this world right now. China needs USD (via USTs since hard currency yields 0%...while USTs are a bit better) almost as badly as the US needs to issue them.

As many issues as there are with USD being the world's reserve currency, it reminds me of the famous Churchill quote regarding Democracy...

"It has been said that Democracy is the worst form of government...except all the others that have been tried."

...change it around a bit...

It has been said that [the USD] is the worst [reserve currency]...except all the others that have been tried.

very true...