tag:blogger.com,1999:blog-34323687.post7961494955026146639..comments2024-03-28T12:22:11.704+00:00Comments on Macro Man: Dollar/Asia: time for a reversal?Macro Manhttp://www.blogger.com/profile/12324967552369915949noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-34323687.post-15637581547329938872008-05-08T08:27:00.000+01:002008-05-08T08:27:00.000+01:00Hi MM,I agree with Bureaucrat and think that marke...Hi MM,<BR/><BR/>I agree with Bureaucrat and think that market partecipants have recently been eager to overestimate "bad news" rather than "good news" about EU economy (cognitive dissonance?), trying to force ECB to cut rates. As I once wrote, my daily job as a credit analyst within a multinational credit insurer allows me to get at least a timely feedback on current business conditions and as far as I know things are bad in Spain and Italy, where small and medium sized firms are really struggling to service ourstanding debts, but no such news is coming from France or Germany (and France and Germany ARE the euro...)<BR/><BR/>Meanwhile, GBP might prove to be real thing for a shorting game...<BR/><BR/>Read you later, ATAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-4024726978008030842008-05-07T21:39:00.000+01:002008-05-07T21:39:00.000+01:00The FRB will follow the EFF all the way to 0%. Wi...The FRB will follow the EFF all the way to 0%. With the operative word being "follow."<BR/><BR/>The dichotomy will be double digit .gov and private borrowing costs.Dhttps://www.blogger.com/profile/09501392241484422000noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-8204054879407538912008-05-07T19:09:00.000+01:002008-05-07T19:09:00.000+01:00In typical fashion the market overshot itself. Thi...In typical fashion the market overshot itself. This alone would suggest to me some dollar firming was in order.<BR/><BR/>I'm wondering if it's not so much the greenback appreciating against the euro as much as it's the euro struggling against other currencies at the moment. In addition to the ECB & BOE rate decisions (which you folks in Europe seem to treat like some kind of celebrity event) I'll be cluing in to Germay's trade balance for March as another barometer of how much slowing is occuring.<BR/><BR/>All that said, I'm not as sanguine about a sustained dollar recovery. IMO investors simply are not pricing in how a very weighed down and increasingly thrift minded consumer is going to translate in to negative earning surprises 6 months to 2 years down the road.....stimulus checks or no stimulus checks.<BR/><BR/>In the end, what will surprise people is not so much their perception of how severe the U.S. downturn was as much as the duration of weak growth before a real expansion occured again. <BR/><BR/>As such, it won't surprise me to see the Fed cut rates again late this year or in 09'.....regardless of how much money they continue pumping in to the economy.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-89043676447741911782008-05-07T17:34:00.000+01:002008-05-07T17:34:00.000+01:00c'est hors du marché..c'est hors du marché..Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-19098698759536721092008-05-07T14:37:00.000+01:002008-05-07T14:37:00.000+01:00B, when I say 'endgame', that's what I mean...ulti...B, when I say 'endgame', that's what I mean...ultimately, they will need to cut, whether in September or this time next year. I don't really intend to play the game of 'when will they' via the strip or anything like that. But ultimately, it's the market that sets asset prices, and if the market is going to want to focus on weak activity data in Europe- which I think, on balance it will, though not perhaps at 1.30 LDN time tomorrow- then that has a market impact, especially if Voldy et al are whacking the euro.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-53104279076342620622008-05-07T13:32:00.000+01:002008-05-07T13:32:00.000+01:00MM,what's going on, you are trading in your better...MM,<BR/>what's going on, you are trading in your better judgement (see your piece some days ago) in order to jump on the "ECB will cut" bandwagon? Admitted, the euro area is probably slowing down - at least some of the "housing boom" countries clearly are. But first, the ECB is well aware that Spain et al. have been booming and growing above potential in recent years - and hence will need to underperform for some time to adjust (not least their huge ca deficits which nobody talks about as they are hidden within the currency union). And second, even if the euro core (read Germany) was slowing down - which is far from certain - the ECB would not have room to cut for a long time to come. Inflation TRENDS are abysmal - and the closer you look at the data, the more obvious it becomes that even core inflation will remain above the ECB target for a long time to come. Given that europe is a less flexible economy - i.e. slack will show up in lower inflation only with long time lags - so why/how on earth would the ECB want to cut?<BR/>PS I am not an ECB insider, so have no superior knowledge on what's going on there. This is based purely on observation and common sense.Anonymousnoreply@blogger.com