Monday, June 05, 2006

The picture is getting clearer...

The US ecomony is as transparent as ever...the US economy is in slowdown
mode, the FED hikes have taken effect and will further increase their
restricitve effects as the last few hikes work into the system, the FED
has gone too far, inflation talk is all the rage but within 6 months
DEFLATION will be the talking point. With a slowing economy and higher
commodities, profits will get hit, stocks are going down, Treasuries are
going up, and Oil is going down.

Inflation will turn out to be a non-event...when unemployment starts
increasing, prices will stop going up! Its so obvious, and yet only a
few of the smarter commentators (, RandomRoger,
TheBigPicture etc) seem to see the slowdown, but even they still think
inflation will continue on up and so the FED has a dilemma...NO! There
is no dilemma...stagflation will not occur when the economy is weak AND
there is confidence in Central Banks (which there is, despite everyone's
whining about Bernanke).

And as for oil...there is plenty oil in the world to go round, and when
the US starts clearly slowing down, the overhang of supply and too many
long positions will crush this market.

So the trades are...long Treasuries (which I have on with my £150 long
in Mar '07 Eurodollars), short stocks (I just day traded the DOW in £3 a
point, selling at 11,162 and it closed at 11,049 so making £339
pounds...I plan to continue to trade from the short side, and have a
core position on with my July 10,450 Put on the DOW), and short Oil,
where I am only short £3/cent and need to increase this...I'll try to
put it on tomorrow when the market is open.

And as for the dollar...I am not entirely convinced it is going to drop
like EVERYONE else in the market. I tend to follow it against EUR and
GBP, and I hate both those currencies. the EUR will eventually fall
apart as the whole monetary union will not work as it is not flexible
enough, and countries can cheat by running large budget deficits, and
the UK is similar to the US so should have rates moving similarly, so
the US having higher rates than the UK will eventually crack the pound,
especially when people realise just how much this country is falling
apart under a socialist tax & spend government. I wouldn't say I'm a
dollar bull, but I am not finding the real reasons to sell it.


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11 June, 2006 12:58  
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21 July, 2006 13:30  
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23 July, 2006 10:26  

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