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jrsiajdranch
Veteran Advisor

ANy guesses onhow low the dollar goes?

Well how low does the dollar go this month?  I do not see good things ahead for the rest of the month. I'll post more thoughts later tonight. I gotta go be productive now.

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11 Replies
hardnox604008
Advisor

Re: ANy guesses onhow low the dollar goes?

What the heck, I'll go out on a limb and say that you probably saw the low this morning.

 

Anything is possible and the Feds desperately want the dollar to keep going down so that the short dollar, long equity/commodity carry trade continues. And of course everyone who is on that trade (meaning:everyone) also wants it to continue and will skirmish against attempted couter attacks.

 

So I'll admit that it can go on longer than you think. But it is a very, very crowded trade that requires the capacity to think like a wildebeest in the center of the herd in order to continue indefintely. Somewhere out there is a cliff, trust me.

 

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Jim Meade / Iowa City
Senior Advisor

Re: ANy guesses onhow low the dollar goes?

At some point the dollar has to keep from going down because the race to the bottom by the world economy will lead to another global depression as surely as anything.

 

But, wait, there is a solution.  The Single Global Currency, with an implementation target date of 2024.

http://www.singleglobalcurrency.org/

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4wd
Senior Contributor

Re: ANy guesses onhow low the dollar goes?

A lot lower, maybe 1/3 more. Where else can the really big money investors go, other than hard commodities which they probably already are in pretty heavy. I think as long as the other worlds currencies are dropping faster than ours, we still are the best bet. I know my dollars still buy groceries. Yesterday, I bought grocery store brand bread for $1/60/loaf,  a gallon of 2% milk for $3.69, and some 85% ground beef for $3.49/lb, and some other various donuts, chips, burger buns. I am sure not going hungry yet. Dollar is still buying here..

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hardnox604008
Advisor

Re: ANy guesses onhow low the dollar goes?

http://www.zerohedge.com/article/portuguese-bond-yields-greek-cds-both-all-time-wides

 

Granted, the market doesn't care about this any moer, just thought I'd throw it out.

 

They EU has enough money in the default fund to "cover" these.

 

The surprise will be Italy but like Dubai (hey, wonder how all that's going with the problems in the UAE?)  Greece, Ireland etc., the market will go on pretending it isn't a problem until one day it suddenly is.

 

for now, the Ministry of Global Truth is in "remain calm, all is well mode."

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hardnox604008
Advisor

Re: ANy guesses onhow low the dollar goes?

I'm thinkin' dis ol'  blind sow mighta just found herself an acorn

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jrsiajdranch
Veteran Advisor

Re: ANy guesses onhow low the dollar goes?

Good Morning Noxie.  I got busy last night and couldn't get things posted back here.

My thoughts are that they have to get the dollar stronger going into the summer drivng seasaon. so the gas price can go down.  The move in gas can be directly traced to dollar movement. it has had three weeks of down and at the same time we have had huge increases in gas and food.  SO they are gonna have to strengthen the dollar.  The problem is that if they do not pump new dollars into the economy thru QEwhatever they have no one buying tresuries.   That means we have to have higher interest rates to invite buyers to part with their money. 

SO which is the worse evil? Lower dollar or higher interest? 

I just don't think they can handle the higher interst so I think they pump more dollars after April 15.  SO that means that commodities are gonna go on a 1 month beating.  Look for corn and beans to get back to a mid feb price as well as gold. Fuel should get down to below 3 here in the next three weeks.  

THe whole thing is a sham. I still think before this gets done The POTUS gets burned real bad with the financials taking him to the wood shed soon.

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hardnox604008
Advisor

Re: ANy guesses onhow low the dollar goes?

Hi JR,

 

FWIW, I think Obama made a very serious mistake in having Bernanke set off the QE watch ahead of the election. Ramped asset values didn't help him in the election and haven't really helped the real economy. Now options are more limited- and stuff does happen like $100 (or whatever) crude.

 

The dollar isn't any good but it is arguably better than the euro or the yen and whether it is better than the yuan or not, the chinese aren't going to let it appreciate much.

 

Evreybody is now short the buck and the red flag of "death of the dollar" stories evrywhere has gone up. At minimum could get a very nice short squeeze going on the USD.

 

Question for Ags is how much that knocks values as the short carry funding that has driven the risk trade gets pinched.

 

There is huge complacency that the Fed won't let the dollar go up or assets go down. But as I said, stuff happens- like extend and pretend in Europe running out or $XXX oil.

 

Best, h

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GoredHusker
Senior Contributor

Re: ANy guesses onhow low the dollar goes?

I see we set a monthly record for deficit spending in February.  The dollar is showing some kind of bottom in here as it was able to rally in the face of this news.  From 1980-1985, the dollar posted a huge rally going from around 94 to 144.  This could happen again in here, but it won't until we get someone serious about controlling our deficit.  I'd like to think the all time low set back in 08' would hold, but I'm not holding my breath if Bernanke implements Q3. 

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hardnox604008
Advisor

Re: ANy guesses onhow low the dollar goes?

Hi Gored,

 

Of course the '80-'85 dollar rally was on account of the Volker interest rate purge.

 

Dollar strength is probably limited as long as the US stays in 0 bound mode, which is a while longer anyway. But Japan is also at 0, the EU at 1 and threatening to hike a quarter so not like there is a lot of expensive money in the world.

 

I'm not in love with the USD but continue to say that the pound, euro and yen are worse currencies. The cando and aussie are arguably better but they're already quite richly priced by historical standards- about 50% above the lows of not too long ago.

 

The USD has been the funding currency of choice in the 6 month asset rampage. With everyone on the long everything/short the dollar trade it will be fought but it will also unwind, with some violence, sometime.

 

Best, h

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