Andrew D

Option Trader Friday Outlook: Is the Dollar Going UUP?

Phil,

I like your call. I can still remember you were calling oil topping (although you were a couple of months earlier). This is when people are betting really money, instead of just talking on TV.

Despite Declining Value, Dollar's Status as World's Reserve Currency Is Safe...For Now

Your comment is just laughable.

The dollar weakness is not directly linked with mountain of debt. Fed can print zillows of dollars, yet USD can be as strong as ever. The depreciation of dollar must be based on the erosion of purchasing power of USD, which I have yet to see. Otherwise, this is just a temporary issue. Let me repeat: there has been generally no decline of purchasing power of the dollar for the past few years. Japanese and Chinese are charging U.S. consumer the same price, if not even less, for the products they manufactured. Electronics, automobiles, furniture, clothing... which one is more expensive than two or three years ago? If USD is worthless, or even "worth less", won't Japanese or Chinese be raising the price for all those imports? For dollar doomers, please get real.

As for China's "dominant" power, let me just tell you this: being a person traveling to China a lot and speaking Chinese well enough, I can safely tell you their GDP numbers are overstated. While Americans are amazed at thousands of Chinese spending millions of dollars buying up everything outside, there are hundreds of millions of poor Chinese who are making less than $500 a month. The Chinese government undoubtedly accumulated enough money to go shopping elsewhere, for the vast majority of Chinese people life is not easy. If Chinese are so rich now, why so many countries still have extremely restrictive visa policies toward Chinese?

Jeff, you need to have a rest. Your comments about Moody's were way off-base, which I already refuted. I am a proud MCO owner when I refuted you (at the price of $19) and will continue to own their common stock.


On Oct 26 12:46 PM Jeff Nielson wrote:

> The author's premises clearly are not supportive of her conclusion
> in any way.
>
> After summarizing SOME of the reasons for the collapsing dollar (but
> omitting the MOST important one: crushing debts which can NEVER be
> repaid), she refutes her own premises by claiming the dollar's status
> is for "decades" - simply because she asserts "there is no credible
> alternative".
>
> The fact is that a "credible alternative" was just created: IMF "SDR's".
> Beyond that, it would/will only take China a few YEARS (not a few
> decades) to make the renminbi a "credible alternative" given that
> it is making significant moves to position its currency as the new
> "reserve currency" on a near-daily basis.
>
> Finally, I had to laugh at the author's suggestion that U.S. hyperinflation
> could occur if U.S. economic growth is "too strong". Economic growth
> does NOT cause hyperinflation. It is ALWAYS a function of grossly
> excessive debts which spiral out of control.
>
> This, in turn leads to massive money-printing to "monetize debt"
> (i.e. print money to PRETEND to pay its bills). Real economic growth
> will ALWAYS reduce not increase the likelihood of hyperinflation
> - since REAL economic growth produces more REVENUES for government
> (as opposed to simply more and more debt).

Three Asset Classes that Can Actually Outpace Coming Inflationary Price Increases

You can pick and choose whatever currency you want. GBP/USD conversion rate haven't changed for ONE CENTURY: It is still in the 1.3 - 2.0 history range and it stands at 1.6. Talking about Japan, JPY has deflationary pressure after the Japanese asset bubble, which I expect the same as here.

The last time I checked: Acura TL costs me 55,000 while in December 2008 it would cost me 57,000. So, the Japanese are willing to accept less USD for their products. That is what you call the "worthless" currency?


On Oct 21 03:58 AM Albertarocks wrote:

> On Oct 20 08:59 PM Andrew D wrote:

Three Asset Classes that Can Actually Outpace Coming Inflationary Price Increases

The obvious problem of this "inflation" talk is that there is scant evidence of such an inflation. Talking about gold's upswing is laughable because it gets little relevance to the consumer price basket. Even oil is not quite irrelevant in this case since the only evidence of its impact is gas price went up 25% - 30% from March low.

Anything else? food? electricity? electronics? automobile? People talk about Fed's huge money supply but it does not seem to have any effect on inflation. So, where is this hyper-duper?

Missed the Move in Gold? Crude Oil Could Be an Alternative Commodity Play

The problem of this argument is that oil is already expensive compared with gold. Apparently, oil's rise underlines the "hope" of economic recovery while gold is actual rising steadily based on dollar weakness.

There has been scarce evidence of oil consumption recovery, if at all.

Geopolitical issues may have an effect, but how much is yet to see. Saudi has extra capacity of 2 million barrels a day, which will fill the entire gap of Iran's output. Nigeria's unrest is a wild card, but the impact should be minimum.

There is replacement of oil, while gold lacks that. The green energy industry may not take over the oil dominance in the near future, however, anything is possible in several years. Five years ago, electric cars were only a concept. Green energy will have to become cheaper for wider adoption. Remember "cheaper" is a relative term. Once people start to use solar to power their house, to use battery for their cars, and to use more natural gas domestically, they are not going back. OPEC knows that; they will fight the balance of reasonably high price and risk of switch to other energy sources. $70 oil is "not bad at all", per Kuwait oil minister in August; $80? maybe a little higher.

Banks and Delinquent Borrowers: The Chickens Are Coming Home to Roost

Mark,

Let me tell you that this "dollar = junk" theory is so wrong. The Fed is indeed printing money; they are printing money to absorb the securities which are being sold to the investors. The "money" is NOT flowing into small businesses and consumers. Therefore, yes, U.S. government prints money to become the largest investor, but we don't see any inflationary pressure. We see record tightening on credit, falling grocery prices, falling real wages; this is NOT inflation.

Secondly, so many people argue that U.S. government really hopes dollar depreciation to "fix all problems". Really, unlike Japan, U.S. is not an export-oriented economy, depreciated dollar has very limited impact for recovery, if at all. Even if theoretically it helps the exports, at certain point this falling dollar thing will trigger a competitive devaluation of other currencies. The "falling" dollar is all relative: do you think China or Europe are stupid? They know, at some point, falling dollar means U.S. export-led recovery at the expense of theirs.

Last, this falling dollar carry trade is becoming the world-renowned one that everyone is pushing into. This area is way too crowded therefore I don't know what will happen if any reversing trigger happens.

It would definitely appear a lot smarter to have said this 6 months ago, but at this moment it is becoming too late to the game.

The Most Expensive US Market Of All Time

It may not appear too smart to bad mouth about this rally, but it will reverse.

I am watching fixed income market closely as if the Treasurys plunge we will have the exact same situation like 1987 crash: falling dollar and rising yields.

It does not make sense for this market at this level, but market can be irrational as long as it wants. What triggers the reversal is unknown, I am just hoping it is not the dollar.

SEC Ignored Warnings of Ratings Fraud

Jeff,

It looks that before any independent panel, such as jury, reaches its decision on this, you already rendered your verdict. I watched Eric Kolchinsky on the CNBC show, and honestly this guy looks fishy in various ways of handling his suspension.

Let's look at another angle: I have yet to see another collaborating evidence that any of them committed fraud. Unlike accounting firms, all those debts are rated by almost all three of them: Moody's, S&P and Fitch. If Moody's committed such a big fraud, wouldn't S&P or Fitch downgraded the rating well before Moody's? The fact is that everyone was stupid, including you and me, does not make any one of them fraudulent.

I can understand the public anger, but unless I see some "good" evidence (not only by the account by this apparently disgruntled ex-employee), I would have to say you do not have a case here.

Will New Finds Mean the End of Peak Oil?

By 2030? Hmm, 20 year ago, electric cars were just a dream. Powering your house using solar is unthinkable. Technology made and will be making amazing things happen. U.S. is on the verge of alternative energy breakthrough.

You can "predict" anything with the assumption of status quo only for a valid reason. But for 20 years? This is like saying that there will be no living space in United States by 3000 if the current immigration influx continues.

Jon Markman sees just enough parallels between now and 18 years ago to get pretty excited, and prompts investors: Get ready to party like it's 1991.

Here again. I remember vividly that some big commentator claimed that stock market was in "permanent plateau" in 2007. When daytraders were just buying low and selling high. Every bubble has a seemingly valid theory, but at the end of the day it will bust and will be ugly.

Regarding Markman's record, judge by yourself:

5/22/2008: Energy stock is still a good buy, hmm right, he is dead on the top.
6/5/2008: It's solar power's time to shine, wonderful, people bought whatever got killed.
10/3/2008: Can the bailout work? Fat chance. It is a "fat chance" stock market declined further, and further.

I treat his article as an entertainment.

Disclaimer: no position at the end of the day in the stock market, intraday shorting, keeping making money - maybe not a lot but much safer.

Jon Markman sees just enough parallels between now and 18 years ago to get pretty excited, and prompts investors: Get ready to party like it's 1991.

Oops, forgot the link:
articles.moneycentral....

Jon Markman sees just enough parallels between now and 18 years ago to get pretty excited, and prompts investors: Get ready to party like it's 1991.

Dude, let me give you a link of what he said on March 17, 2009 when the stock market was about to take off. He said on that day the rally was fake (in March 2009) and would fade away in April.

His "tracking record" is horrible. Look at his "portfolio"'s performance: underperforming S&P 500 by 5% annually since inception.

Hhh, well said.


On Sep 19 01:05 PM E Nuff Sed wrote:

> Before you guys trash Jon Markman, look at his record. He was one
> of the few people who correctly called the bear market and then correctly
> called the subsequent rally. (Check out his articles on MSN Money).
>
>
> The trap most of the bears have fallen into - is that you are equating
> local economic conditions with global investing. The travails of
> Michigan or California is peripheral to the S&P 500 companies,
> which are global in nature. For example look at the explosive growth
> which will drive the BRIC's for decades.
>
> Businesses have cut costs aggressively and are now coiled for global
> expansion with low leverage and cheap capital. M&A activity
> is already reflecting it. S&P should hit 1200 by the end of
> the year. (pre-lehman level). Earnings will continue to bounce
> back from the depressed level and positive surprises abound. This
> will be the fuel which brings the capitulating bears back into the
> market. S&P 1400 by the end of 2010 is not out of the question.
> That is a 30% increase from here. You ain't gonna get is T-Bill
> (except if you are shorting them).

The Short Case On Garmin

Don't bother to look at any article from this author.

I remember he used to bash MOVI in thestreet.com when MOVI was trading at 2. He thought MOVI should be -7. Just look at when happened after.

Sandisk May Experience an Aggressive Decline This Week

With all the due respect, if this kind of TA works, we should be able to make a limit order of a "resistance" or "support" price and it will be certain to make profits.

SNDK's charts actually looks horrible, but that is actually where the best of long is set up - everyone is pessimistic.

Speaking of the commoditization of their products, it is plain wrong to say that "the price is down XX%" The price PER BIT will be down sequentially, because they charge the same price for larger capacity - it is as simple as that. Technology advances when they can built more capacity, more powerful products, just like when we had floppy-disk, compact-disk and DVD disk. If the logic of this article holds, then we will dump shares of Intel, Western Digital, even Apple, since the price remains in the same range while the products (CPUs, Hard drives, Macs) become more powerful.

Dude, this article is just ignorable.