subject: Inflaion is here....dollar is dead......according to everyone [print this page] Inflaion is here....dollar is dead......according to everyone
Thursday, February 24, 2011
Inflation IS HERE....US Dollar IS DEAD.....according to EVERYONE
The markets are putting on quite a show for us at the moment. Excitement, fear, greed, confusion and certainty all seem to reign..........all at the same time!
How HIGH will inflation go?
Ho High will oil go?
Will Saudia Arabia have a revolution?
Is the stock market a "buy" after 3 days of losses?
When will the US$ disappear?
There is a lot of noise out there!
For me finding a way to cut through the noise helps. So allow me, if you will.
Oil has been rising since dipping below $40pb back in late '08 / early '09 - It is still rising, so obviously it's rising trend is NOT a result of Libya & Egypt etc etc. Sure the constant news reports of what MIGHT or MIGHT not happen grease the wheels of fear a little bit but, the Africans did not cause this oil rally. It is rallying because it fell so far, so fast back in crisis '08! Thats it. It probably has some further to go, although we are much closer to the end than the beginning of this move. When it tops it is likely to fall hard and fast.
Inflation has been the watchword for many for quite some time now. Food inflation is an issue in Asia & Africa, partly because of weather and farming issues and partly because of wild speculation in the commodities markets. How high will it go? I have no idea, it's difficult to get a read on how high it is now but again, I think we are much closer to the end of this inflation scare than it's beginning. When the scare recedes that horrible "D" word will make a surpirse, guest appearance in the Western world and cause more havoc than his friend "I"nflation ever did.
As for the dollar, I think they are measuring the coffin as we speak. Surely it is DEAD. New lows against the Swiss Franc, below parity against the Loonie and Aussie.......dead, dead, dead.
Well thats what EVERYONE is saying, talk of the dollar's demise is everywhere again, that usually means only one thing. The dollar will rise like a Phoenix from the flames of uncontrollable INFLATION and Central Bank debasement to the crest of a tidal wave of DEFLATION.
From a purely technical point of view the charts of the USD vs CHF, AUD, Euro, GBP, ZAR & CAD all look pretty bullish to me. The down dollar trend is clearly running out of steam, patterns look almost complete and suggest a powerful rise for the buck is coming soon. Time will tell!
The fact that we are seeing riots and demonstrations in so many places suggests to me that this particular trend (food price inflation) is going to be exhausted quite soon. That will NOT mean the end of rioting. Europe will see more civil disobedience when then next leg of deleveraging, austerity and panic starts to bite. USA will probably get in on the act before the net leg is complete.
As for the stockmarket, should we buy this dip? Well I am NOT - that is not to say we do not see another upleg, but with the market so overbought and the inflationary trend so widely believed, it will soon be time for a turn, perhaps this is it.......time will tell.
