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Posts by "speculator"
804 Posts Total by "speculator":
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Posts by Anonymous "speculator":
money printing will not go on forever in US and compared to UK QE is not that big infact smaller on a dollar basis relative to GDP. IF QE ends by fed this fall then stocks will have to find other reasons to rally which will be hard in current circumstances. Deflationary data will also impact stocks to the downside when QE ends.
As a contrarian, dollar bearishness is at extreme levels and which normally results in a turning point. It is no good extrapolating trends and believing they will go in one direction indefinitely.
There is data that appears to conclude that big investors are invested whilst retail investors are now starting to come in as they missed the rally. This can be seen as a short term top in the market and a possible turning point. Volume has also been lighter than normal.
Its amazing how overbought the stock markets are in UK/US but still climbing. But the carry trade can still work if the interest rate differentials exists despite stocks. So if stocks fall, dollar can still fall due to dollar carry trade? This may explain some of unusual movements in the market
personnally I think sterling will become the next carry currency when interest rates fall with plenty of liquidity in UK - Do not underestimate this possibility. For the meantime dollar is possibly being used as the carry.
Furthermore as you mention ashraf, downside risks remain on sterling as it is fundamentally flawed. Sterling volatility remains high. I expect the dollar to run up in october when fed cease their QE. I will not discount more BoE QE.
But this stock market correction that many are talking about I believe will not happen this month as historically sep is a very poor US equities market. I believe the market is overpriced but I find it hard to say it will play out like the 1929 crash as monetary policy was not like it is today with QE and excess liquidity present. However, I believe we will not go down in excess of 10% in the short term (few months) for the simple reason of market being overpriced - We need some kind of big shock or simultaneous smaller as priced remain very sticky downwards. The market may easily remain overpriced or at current levels for quite some time.
Oil however is a different animal and far more risky. We could quite easily see 60 over the next few weeks. This would bring some dollar strength. But I feel that the dollar is trying to form a base and then rally for some time into 2010. This can be seen by dollar strength appearing at the end of the New York sessions.