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Longcreekfarms
Senior Contributor

Re: watch the dollar

With a pile of man-power...
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jrsiajdranch
Veteran Advisor

Re: watch the dollar

Just wondering when Brazil says the same thing
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jrsiajdranch
Veteran Advisor

Re: watch the dollar

Talk about boots on the ground
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Palouser
Senior Advisor

Re: watch the dollar

I was with some Canadians yesterday and they were griping about the exchange rate again. They wondered what that was about. I have no idea.
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hardnox
Advisor

Re: watch the dollar

I'm a little surprised by the weakness of the dollar but haven't changed my mind.

 

US banks have very little exposure to emerging markets, European banks a lot. We've probably once again managed to export a crisis as, this time, all the CB liquidity flows (not all ours, but a lot) went to emerging markets and created bubbles, which are now popping.

 

China and Japan have their problems if data is to be believed.

 

So I'll stick with the "least dirty shirt" thesis for a while.

 

We did have a very nice and broad commodity bounce, though. which is going to keep the deflationary wolf from the door for a while.

 

Also, as far as DX goes specifically, its about half euro. And the strong euro is absolutely killing them- they're going to have to cry uncle at some point.

 

http://www.telegraph.co.uk/finance/financialcrisis/10687708/Top-German-body-calls-for-QE-blitz-to-av...

 

When even a part of the German establishment is calling for QE, its a big deal.

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hardnox
Advisor

Re: watch the dollar

Hi Pal,

 

Thinking about the cando exchange rate.

 

Back in the early 2000s at some point when the Canadian was at about .65 I was kinda toying, can't say that I was super serious, with the idea buying a prairie farm.

 

At that point in addition to the cheap currency they were still reeling from the end of the rail subsidies.

 

#8976 on the list of brilliant moves I could have and didn't make. Probably would have been a tenfer, 6X  for sure.

 

However I don't think my wife would have been very interested in living 500 miles from the nearest Nordstoms.  Although they do have a catalog, and there's mail up there, I think.

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sw363535
Honored Advisor

Re: watch the dollar

The memory of a good shoping afternoon probably wouldn't have kept air in the tires very long.  🙂

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hardnox
Advisor

Re: watch the dollar

Of course all things being equal our PTB would like a weaker dollar.  And they'd also like a bit of inflation, or at least seem to view any increase in CPI, from whatever area, as preferable to deflation.

 

But in the real world, when we relentlessly drove the dollar lower 2002-8 the net effect was the mother of all carry trades with everyone on the planet short the buck and long commodities.  Which in particular resulted in $150 oil. And while that hardly happened in a vacuum- there was plenty else going on- that's more than enough to starve off any growth.

 

So while we might prefer that particular brand of poison I'm not sure that they will.

 

It used to be the bond vigilantes who ruled with the whip hand, now the commodity vigilantes rule the roost.

 

Anyway, I'm guessing they're shooting for some form of stability, such as it is. CRB range probably 500-600, DX 78-84.

 

Until something goes wrong, and it will.

 

 

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