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Is Betting Against the US Dollar Really Such a Good Idea?
According to Shawn Hackett, founder and president of Hackett Financial Advisors, only 3% of traders are bullish the US dollar right now. In June, that number was 95%.
Talk about a crowded trade!
For what it is worth, I continue to lean deflationary. By definition, that pretty much makes me a dollar bull right now.
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8 comments:
For what it is worth, I continue to lean deflationary. By definition, that pretty much makes me a dollar bull right now.
That's pretty much my outlook too. Here's a few personal anecdotes. I was at Walmart yesterday to checking out computer prices. They had a special on short sleeve collared shirts (golf, polo whatever you call them). Very nice quality. The price was $7 for men's sizes and $5 for kid's sizes. I was going to buy a few but then it struck me that we have too many shirts already.
I moved on to the electronics area to look at laptops. The prices were the lowest I've ever seen. For $348, I could have purchased a laptop with 2 somethings of short term memory (ram?) and 250 somethings of long term memory ( or speed?). It was a name brand too. That was $50 cheaper than the last time I checked a few weeks ago. I may pull the trigger soon depending on how my existing computer holds up - the video card appear to be shot.
While I was there i looked at TVs and couldn't get over the level of deflation.
It's not all falling prices though. Gasoline is up 30 cents a gallon recently. That's a bummer. I still think gas prices will "go in the tank" as cash flow issues surface.
A lot of people (7 million households) are living rent free. They're paying the credit card balances but not the mortgage. That won't last for ever. In the mean time, skipped mortgage payments are supporting other spending and that dynamic is probably being double counted in GDP (& earnings) thanks to owners equivalent rent imputations.
mab,
"A lot of people (7 million households) are living rent free."
My biggest concern right now is that the assumption that the number of households will grow seems locked in stone by most.
I've personally seen people live in their cars and/or at the office. Fairly sure neither would be considered to be a household. I can also picture older retirees moving in with their children for economic reasons (and health reasons).
There's a reason Chris Farley's old "Living in a van down by the river" SNL skits are amusing to us. Humor is often based at least partially on reality. We can imagine him living in that van. It does not take a great leap of faith.
Fairly sure neither would be considered to be a household.
My understanding is that an occupied housing unit is a household. And let's face it, pushing up the cost of housing, education, medical care, etc. with debt discourages household formation. Bernanke is an imbecile and a crook.
Only an eCONomic fool or a criminal would jeopardize the foundational pillars of future economic prosperity to preserve fictitious wealth/fraudulent debt.
mab,
Cramer says there is always a bull market somewhere.
Other than the obvious and failed subprime fiasco, how else can I invest in householdless (homeless) people? Surely that bull market will continue. Sigh.
Perhaps I should invest in death and taxes too, working under the assumption that we either can't or won't pay for all that we have promised ourselves. Bull market in denial!
Keep in mind there are two kinds of "deflation."
One kind is when companies innovate to bring costs down. This is what you see in computers. Or when Wal-Mart finds a cheaper supplier in China to squeeze to death.
The other kind is monetary deflation when the price level of everything goes down due to a shrinking money supply and/or velocity.
Since we are seeing gas up, cotton up, etc. I would seriously wonder if we are in true monetary deflation or you are just seeing companies desperate to keep market share offering fire sale prices even as their own costs go up. (PPI was up, CPI was flat....you do the math.)
Coba
Coba,
I lean deflationary on both the CPI & the PPI. I'm seeing neither right now, yet.
It is easier for me to lean deflationary on the PPI because like Chanos, I am especially bearish on China and oil prices have more than doubled from the previous deflationary bottom (but have been fairly flat since I turned deflationary last November).
Stag...
in June UUP (as you know) peaked and began it's decline. Shawn Hackett claims that 95% of traders were bullish!
Following that logic (95% of traders/sheep are wrong), if only 3% of traders are bullish now...
remy,
I know! Amazing, isn't it?
Surely all those currency trading TV advertisements come with professional level currency trading training though. Surely *everyone* can still win in the long run! Surely! ;)
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