The cheh shaped recovery – Part I: End of the beginning - Eric Janszen

[icm63]

The USD dollar bull is not dead, ... gold and $USD are at crtical stages.

Gold has failed to push up, and even if it does push up will it hold new high prices as inflation expectations are mute. Gold to sell off as the big boys realise that inflation issues are a long way off yet...

Are the stock market lows in, I would say not, just look at the action of the 10ry yield. ON this anaylsis dollar bull has more juice in it.

UPDATE1 : Why did the 2 yr pop, because things are getting better, hell no, they popped cause no body wants the stuff.

UPDATE2 : Sorry didnt read the 2nd part.. we of mostly of the same mind, dollar will find a bid as fed must pull back on the juice and gold will stutter sideways as inflation issues are way off in the future.

[Digidiver]

I sure hope you're right... been wanting to jump in and pick up some more but it's hard to read the near term direction.

[grapejelly]

I think oil will dip again, as deleveraging continues and the USD goes up again against major currencies. But I don't think that will last very long. Maybe another year. At some point the flight into tangibles creates liftoff for oil and gold.

[Chris Coles]

The Times, London had a piece about UK£ Gilt sales yesterday that will also start to point towards what is going to happen in the United States and the $US. It has long been my opinion that the old mantra that if the US sneezes, the UK catches a cold and with that in mind I believe the UK will lead into the inflation.

The Times

June 16, 2009

Government tries out taste for debt with £5bn gilt sale

Ian King, Deputy Business Editor

http://business.timesonline.co.uk/to...MC-Bltn=BCJBUA

[johngaltfla]

I think we see a test of the 78 level on the USD index then one final run to close and run up past the 82 level. After the Chinese and Russians sell off enough of their dollar denominated garbage and set up contracts for commodities with the rest, they begin the process of throwing BRIC bonds at the dollar via IMF SDRs. This will create a massive contraction in the desire to own or bid on dollar denominated debt.

After that, it's all over but Ben and the Fat Lady singing. He will HAVE to monetize the debt or allow a political realignment to occur which destroys the policy arm of the Fed and creates massive unrest in the U.S. and Mexico.

In the mean time, the BRIC nations make out like bandits because they know the playbook and Obama has no clue as to what is about to hit him. The one consideration the wizards at the Fed never thought was possible is simple:

What happens when creditor nations elect to short the dollar with their SWF's?

[occdude]

woaaaaaaaaaaaaaaaaaa, there Nelly. Aren't we forgetting something? If foreigners dump dollars, THEIR dollars dump. Can they dump them all at once? Heck no, thats why the Ruskies and the Japanese act like the dollar can do no harm. Will the Fed monetize? Lets say yes, they monetize and people dump bonds which the Fed purchases back with OH!, OH!........dollars. See the problem? Thats why no pump and dump. The game plan is, you monetize, we drive up interest rates which makes you more likely to monetize, drive up rates etc.......The Fed is between a rock and a hard spot.

You think they can just dump dollars into commodities? If they even THINK about doing that on a large scale, the prices will go to Pluto and beyond, to some other galaxy yet to be named...... No, they need to ween themselves and the markets off. This won't be a quick flight, but a slow steady march out of the dollar and into a more reliable store of value.

[johngaltfla]

woaaaaaaaaaaaaaaaaaa, there Nelly. Aren't we forgetting something? If foreigners dump dollars, THEIR dollars dump. Can they dump them all at once? Heck no, thats why the Ruskies and the Japanese act like the dollar can do no harm. Will the Fed monetize? Lets say yes, they monetize and people dump bonds which the Fed purchases back with OH!, OH!........dollars. See the problem? Thats why no pump and dump. The game plan is, you monetize, we drive up interest rates which makes you more likely to monetize, drive up rates etc.......The Fed is between a rock and a hard spot.

You think they can just dump dollars into commodities? If they even THINK about doing that on a large scale, the prices will go to Pluto and beyond, to some other galaxy yet to be named...... No, they need to ween themselves and the markets off. This won't be a quick flight, but a slow steady march out of the dollar and into a more reliable store of value.

Keep in mind the march started last August with the Chinese and Russians rotating 10's and 30's into 1-3-6 month and 2 year or less durations and short term instruments. They have no interest in holding anything longer than 2 years in their reserves. The problem is not their "dumping" dollars; it's the problem of setting up contracts for commodities, long term continuous contracts I might add, with third world countries for resources then they repatriate them here for ag products primarily, then weapons and very little else of what we produce.

The Fed has put themselves in this box by not allowing the markets to liquidate the bad debt at a correct valuation. Hence we are about to see the monetization cycle from hell you are referring to.