Davos,
That worries me.
Even overnight in the UK, the (S & P) market is STILL going up (818 as I write). Are we REALLY wrong about this all?
David
Thank you so much… the walls were starting to close in and I was beginning to lose my mind over this!
I’m decades away from retirement. This posting reinforces the reality, to me, that there will not be any type of SS when I reach an age where I could receive this so-called benefit. If there is good probability of higher taxes and a lower dollar in the future, is it time to cash in the 401ks and Rollover IRAs?
OMG, they didn’t…
OMG, they didn’t… what???
Hello DavidC:
Re: post #24
Good one Davos!
Cat
Hi Cat,
Why does the dollar go down when the markets go up and visa versa? Maybe a dumb question, but I don’t see the correlation. Thanks, Bill
I count at least 5 dead cat bounces there for Enron, no offense cat! There were 8 I believe on the way down during GD I.
I have to say that I am amazed at just how starved the markets are for any reason to bounce up. Futures up on the G20 meetings? What will they possibly come up with to fix this mess?
The market is schizophrenic!
Best,
Rog
Re: post 26
Hi Bill,
I don’t know… I give up on any understanding of the USD. I can’t get my head wrapped around the fundamentals because I don’t know what they mean anymore. I don’t understand what all the printed money going to companies truly means.
As to why the only way to make money in the market is to do what the market is doing. You can’t do what you think it should be doing. The fundamentals don’t matter, they all seem to be a lie anyway.
Be market neutral… Do what the charts tell you, whether or not you understand why. They don’t lie.
Cat
Well, the fundamental explanation would be that companies both can export more as their home currency weakens, and receive higher dollar payments for their overseas goods and services due to the exchange rate (price your products in Euros, and enjoy more dollars as the dollar declines against the Euro).
But the real reason, as far as I am concerned, is the extremely high correlation between futures buying activity and the dollar price of the Yen.
Briefly, as I and many others have been noting that for the past year or so, there’s been a very, very high inverse correlation between the Yen and stock markets.
My explanation for this is that the Yen is being used as a massive source of liquidity by someone. Sell the Yen, buy stocks. I am certain that lots of black-box trading programs are wired to this relationship because it is so tight, so often repeated, and pretty much of a "take it to the bank" sort of relationship.
When I want to confirm a move in the stock market, I always begin with a glance at the Yen chart. It rarely lies.
For example, today the Yen chart says the stock market is going up.
So I think that the explanation has less to do with the fundamentals about the dollar and more to do with the hyper liquidity being pumped out by our friends in Japan which is being used as a primary fuel source for stock markets around the world.
Chris,
Thank you for the explanation. You’re the man!
Cat
Thanks, Chris.
Bill
Hi Chris, I’m going to have to disagree with this statement: "…the funding crisis will translate into reduced foreign troop levels. " Based on Obama’s commitment to more troops in Afghanistan, I don’t see why a little bankruptcy would cause us to rethink our whole empire thing. Besides, where would the UN get their troops from then if we decided to close up shop? If history shows us anything, when governments are in crisis you rarely see a decrease in military activity.
It is interesting how the focus is on the difficulty the government is going to have due to the inability to borrow from the Social Security ‘trust fund’ rather than what the focus should be on; the millions of Americans who currently depend on Social Security to live…we’re talking about living versus frivilous spending!
"The SS fund payments will equal disbursements in 5 years"
"OK well maybe we should stop borrowing from it for now"
…I suppose that train of thought could only take place in a fictional government?
Chris,
The obvious growing frustration with our "leaders" that you express is being felt by all of us that can actually balance a checkbook. Thank you for continuing to shine the light on these obsurdities as the day of reckoning approaches.
And writing from here in the UK, where our governments have just pledged $1,000,000,000,000 to - in the words of Gordon Brown - "fight the recession", things indeed look grim. A very significant amount of this trillion will go to the IMF.
Exactly where do these politicians get the nerve?
Our British MPs are paid inflation-linked salaries and pensions. Is it the same with the US Congress and President? (I bet it is)
If so, then there is our answer. So long as the people in power and are able to print money, why should they care for the honest bloke trying to keep up with inflation. The idiots at the top will be ok, so long as we vote for them!
And who exactly is the IMF? I vote for Mr Andrew Turner MP (Conservative, Isle of Wight). He goes to Westminster, on my behalf, and champions my cause. Exactly what input does he have on the decision making process at the IMF? I would wager precisely none. But it is my tax - either through receipts to the Treasury, or inflation - which will fund the IMF. And they call this democracy!
I know that most here will be US citizens. Certainly you will all be aware that the Revolutionary War was predicated upon the principle that men should not be forced to pay taxes with out representation. Well, how exactly is the average American voter or British voter going to be represented at the IMF? We are not.
I have always truly respected the United States. I believe that your written Constitution is the most beautiful codification of the aspiration of the human spirit to be free. What gives me sleepless nights is that there is a growing disconnect between the people and the power-brokers. The IMF is a truly terrifying instrument of oppression. Democracy is on life support. Only the implied freedoms contained within the US Constitution can save all the people of the world from tyranny. And I believe that time is running out for the American people to have any say in the matter. Please, America, look to your Constitution. For the sake of us all.
“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”
[quote=TechGuy]
Terminal Velocity: There would be no difference between dropping it from a height of a mile or just few hundred feet.
[/quote] Since Time = Distance / avg.Speed there is in fact a difference between dropping from a height of 1 mile(5280 feet) and a few hundred feet. That difference is the amount of time the object will impact the frog, although the force(and the outcome) will be the same.
[quote=Ruhh][quote=bikemonkey]
btw, has anyone else noticed what appears to be a lack of coverage on the G-20 riots?
[/quote]
this from canadian public broadcaster CBC
http://www.cbc.ca/world/story/2009/04/01/g20-protests-london034.html
enjoy
[/quote]Friend, please tell me you don’t normally receive your news from the CBC. I trust them as much as I do the NYT, which is not at all. The Canadian Government seriously needs to cut funding to these bleeding-heart clowns. They don’t even do "Hockey Night in Canada" right anymore (check back issues on McLean’s on this very topic).
Jim Puplava of financialsense.com and others call that the Yen Carry Trade. If I understand right, borrowers get the Japanese Yen at very low interest, using it to buy stock or other things. Basically using the Yen for free. Hence the inverse relationship between the Yen and the stock market.
Just for fun, I did a quick correlation study of the daily values of the SP500 vs. the USDJPY pair for the last year. The correlation coefficient was 0.83. It isn’t perfectly correlated, but the relationship is pretty high. This correlation, however, does not imply causation.
Definition of the correlation coefficient:
The correlation coefficient is a number between 0 and 1. If there is no relationship between the predicted values and the actual values the correlation coefficient is 0 or very low (the predicted values are no better than random numbers). As the strength of the relationship between the predicted values and actual values increases so does the correlation coefficient. A perfect fit gives a coefficient of 1.0. Thus the higher the correlation coefficient the better.