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by Ashraf Laidi
Posted: Feb 20, 2010 5:00
Comments: 30765
Posted: Feb 20, 2010 5:00
Comments: 30765
Forum Topic:
EUR
Discuss EUR in this thread
If there is no lifeboat left try floe or grasp a straw .
I have no issue with that
I am here to learn, share info and opinion, hopefully to the benefit, not detriment of others.
Xaron,
Theoretically, a third way comes up immediatley to my mind. Let's say the US economy DOES exhibit growth rates of 5 per cent a year. You know, currency valuation is a relative thing...
if USD appreciates pricewise, then all other things equal, these commodity prices would be even higher lets say in EU or in UK or in Egypt or in Tunisia and so and so on.
You must be implying that if USD value increases, then it is reasonable to expect the commodity prices to fall.
However I do not see how USD value could increase with the mentioned US debt below in the article. US is bankrupt and I am with Dave to listen to what Richard Russell is saying.
If we were stupid enough to actually trade all the fundamental calls made in the last year we would probably be broke. The only way to trade consistently profitably is with a personal system to handle price action. Charts do not lie if they are read with an unbiased open mind. If you choose to follow economists and forex fundie barkers you will probably die a painful death.
You can integrate a fundamental bias with your technical expertise but if you have no technical expertise you are nothing more than a ship stuck in fog with the GPS and radar down and no one who knows anything about seamanship.
Lots of issues to put into perspective, especially for a long term investor.
Allow me just one immediate correction to your post. Arguably, one would presume that ONE of the ways this USD denominated commodity inflation in the World could be stopped is when USD APPRECIATES.
No one is tupid enough to go buy US asstets with an yield of 5% when the inflation is 7% and the real yield is negative 2%. Are clear about that?
And you think that these nominal yields of 3.8% are real? f you strip the inflation component (I mean real inflation), the yield are negative.
Fed is supporting the US treas. market. If not, the US treas. would sell-off and yield would go towards 5+ % to compensate for inflation.
The other day, the Fed became the largest holder of US treas., surpassing China.
So you still think that EURUSD of 2.00 and above is not possible? Come on.
Only way this USD denominated commodity inflation in the World could be stopped is when USD devalues. And the markets expect that. Otherwise all countries in the World risk following the Egypt scenario. Do you want that in your country???
If China is cash strapped it is silly to claim China commands the FED. Absolutely silly.
The FED is in the driver's seat. It matters not at all whether one likes that.