Redman

Dollar Strength: An Illusion

OK...so if you were a foreigner and wanted to buy..what currency would you buy? Euros? Yuan? The Euro has been artificially propped up for some time and is probably falling to a level more appropriate with the current economic climate in "the Zone". The Yuan?...you say? If you don't remember...China is STILL a Communist country that, notwithstanding their export-driven capitalist nature, is basically isolationist with world-standing desires.
The U.S. is about 6-9 months along with their crisis..which means everybody else is being driven out of their "denial" phase at a much slower pace in relation.
I remember the fall of '91 when the Bank for International Settlements increased the capital requirement rules for all central banks. The 30 year was at 9 5/8% , and when the banks started to buy treasuries to enhance their balance sheets, rates tumbled, the Japs..who were cross-capitalized in the Nikkei, had to sell stocks and buy treasuries. The rest is history.
The markets may be confused at times but they are the arbitor at the end of the day..despite their lack of pricing power during these times.
The rest of the world is taking their lead from the Fed despite what anyone thinks..right or wrong.
Stay in cash and watch the dollar.