The $ is getting K I L L E D

[nero3]

Re: The $ is getting K I L L E D

I think Warren Buffet's statement that every instinct in his body told him that he would do best in holding his Goldman Sachs Warrents towards they expired in 2013, is very telling of what we can experience, as I think Goldman Sachs is very much floating on the weak dollar, commodity, emerging market, china bubble, even goldman sachs have predicted (years ago) that China should take off once the commodity cycle peaks, maybe that's what's happening now, even I think the commodity cycle might still be on.

[Moe_Gamble]

Re: The $ is getting K I L L E D

I think this kind of bubble where the perception of an undervalued currency creates some sort of gold rush, have occurred many times in Asia... I think the straight line the Shanghai index moves in, with very low volatility is very fascinating, and most certainly a proof it's a bubble. However, I think it's going higher. Perhaps a superbubble That we see 6-8000 within the next years would not surprise me at all.

Just looked at a chart. I think you're right.

[metalman]

Re: The $ is getting K I L L E D

Just looked at a chart. I think you're right.

guys... remember this...

Today I Shorted China

9/26/2007

Yesterday I took part in a roundtable discussion with some seriously smart, articulate money managers, two of whom are putting their clients into foreign stocks. Well-run companies with nice dividends in fiscally-sound countries will outperform, they said. And a rising euro or yen or yuan will actually be a great thing for their countries when the dollar really starts to tank, because a rising currency will make these countries far richer. Their companies will be able to buy up foreign assets and their consumers will become engines of growth as they snap up increasingly cheap food, cars and toys.
It all sounds so…civilized, this smooth transition to a world in which the U.S. is no longer central and other countries can consume enough to more than offset the loss of U.S. demand. I played devil’s advocate a bit, pointing out the downside of a plunging dollar for the rest of the world and opined that maybe other stock markets would suffer a bit along the way. But roundtables being what they are, the conversation moved on and I didn’t a chance to make the point all that forcefully. I’ve spent the rest of the day playing the argument over in my head, and far from being convinced by the smooth-transition thesis, I’m more sure than ever that a plunging dollar makes foreign stocks (other than gold miners) nearly as risky as their U.S. counterparts.

followed by this...

Shorting China is Trickier than I Thought

9/27/2007

Here’s one for the ‘don’t try this at home,’ file. Yesterday’s post on how the dollar’s decline makes China’s red-hot stock market look like a classic short candidate—and my decision to buy puts on a China ETF—brought the following response from Richard Saler, a “former fund manager specializing in international equities”:

“I'm sympathetic to your short idea. I would short a chart like that as well. However, the FXI is made up of H shares not the A shares which the chart shows. Although the FXI has had a big run it is nothing like the A shares. The valuation while stretched is not absurd like A shares either. With the government trying to cool the A share market it is now experimenting by letting some citizens invest abroad in H shares. This program is likely to be expanded and the arbitrage of A vs H shares could continue, since several A shares also trade at steep discounts in Hong Kong. This liquidity driven market could continue longer than you think. As a value investor I certainly wouldn't buy the FXI but given the current technical factors and liquidity this index could still have substantial upside. If I could sell the Shanghai A shares I would but that's not available. I think your chart and comments were misleading since FXI are H not A shares and right now that's a big difference. Any thoughts?"

I had a lot of thoughts, of course, the main one being why the hell doesn’t the ETF explain in big red letters that there’s a valuation difference between its Chinese stocks and the home-grown variety. Another thought: this is why we have investment pros, to keep the unwary novice (which I clearly am when it comes to Asian stocks) from paying too much tuition at Bonehead University.

some day it really will be time to short china... i wonder when...

[Moe_Gamble]

Re: The $ is getting K I L L E D

I think the straight line the Shanghai index moves in, with very low volatility is very fascinating, and most certainly a proof it's a bubble. However, I think it's going higher. Perhaps a superbubble That we see 6-8000 within the next years would not surprise me at all.

The more I think about this, the more I like it, partly because, although this certainly looks bubblicious, the move can't be entirely bubble. Part of what's going on is China buying things like nuclear plant components from Sweden (per Cobben's post, another thread), for example.

To the extent that meaningful investment in things like energy efficiency is occurring (thanks to China's gift to the world), we may actually see a better world economy ahead.

[Moe_Gamble]

Re: The $ is getting K I L L E D

some day it really will be time to short china... i wonder when...

Absolutely right, metalman. It's more about how far too far it can go.

[0tr]

Re: The $ is getting K I L L E D

iTulip is an excellent place to find very good discussion by so many knowledgeable people, I'm glad to read what you all have to say. I'm learning from you all constantly, with your excellent interchange of ideas.

My humble opinion, is that what we have witnessed over the past few quarters is the most hostile take-over in history, without military assistance. To add insult to injury, the assets seized will be re-priced higher and higher, by painting the tape. The trillions in low yield money market funds/cds/tbills will then gradually be lured into chasing the gains. And these massive money market funds etc are a current/future target by those who have seized the assets.

The charts and comparisons to other counties and periods are tangents. The reserve status and massive military and other spending make this different than Japan, and previous eras.

LEH and BSC were not accidents. The primary dealers have always handled large portfolios with little equity. BSCs days have been numbered ever since the LTCM 'failure'.

Of course I don't really know anything, I'm sure you can instantly detect the errors in my imaginings.

[nero3]

Re: The $ is getting K I L L E D

Absolutely right, metalman. It's more about how far too far it can go.

I think it will be when real estate prices in Shanghai starts to resemble Tokyo in the late 80's. That is an economy that is no longer driven by production, export and a cheap currency, but rather domestic speculation running in high gear, while other cheaper countries like Vietnam and Cambodia are taking over the low end production, and the cheap currency have been replaced with an expensive currency. Then Chinese tourists will be spending like crazy, giving huge tips in cheap dollars when they come to the US, just like Japanese tourists in the late 80-s after the plaza accord in 85.

[icm63]

Re: The $ is getting K I L L E D

DOLLAR BULL will be back soon !

http://www.dailyfx.com/story/tophead...844398807.html

Germany’s Consumer Price Index is set to show the annual pace of inflation turned negative for the first time in 23 years in July after holding at a standstill in the previous two months, shrinking at an annual pace of -0.4%. If expectations of falling prices become entrenched, the Euro Zone’s largest economy and by extension the currency bloc as a whole could be facing a long-term period of stagnation as consumers and businesses are encouraged to wait for the best possible bargain and perpetually delay spending and investment.
The European Central Bank has seemingly struggled to formulate an effective policy response to the deflationary threat thus far.

Deflation is not DEAD, yet ! NO wonder why GOLD is not racing to new highs...

[metalman]

Re: The $ is getting K I L L E D

DOLLAR BULL will be back soon !

http://www.dailyfx.com/story/tophead...844398807.html



Deflation is not DEAD, yet ! NO wonder why GOLD is not racing to new highs...

ha, ha. gold not racing to new highs = deflation?

ha, ha. ha. that's hilarious.

deflation used to be oil falling to $20... gold crashing to $500... etc. as the deflationists warned last year... when the gov't ran out of paper or disk space for zeros... bwah, ha ha ha!

keep moving the goal!

[nero3]

Re: The $ is getting K I L L E D

I think for the deflation view to have any success, hmm, china must come crashing down, the sooner the better, and most commodities have to tank, not only natural gas, infact there is so much froth in agricultural commodities, sugar for one, that there is no sign of deflation.

I don't think deflation is going to happen, and I think the reason gold is where it is, is hmm, that gold have gotten a more solid fan core, from those who think gold is the only answer, or those who want to have it in their portfolio and that gold is even trading at what I consider a premium price to some trends, gold followed in the years from 2003, among them railroad stocks. I attribute gold holding up so well, compared to silver, and some of this other trends to the fact that gold is in some form of bubble. I have mentioned it before, when this gap was much bigger, but when this gap is closed, and rail shares are trending higher, then gold will begin to rise. Note that silver trades very similar to rails, silver tends to move 4-5 months before rails, rails just lag this inflation that silver seems to measure so fine. Silver is still to cheap compared to gold, for gold to break out above 1000 dollars. The relationship between rails and silver is important to remember, in case silver makes a big move, that one happens to miss. Then it is good to know that rails come after with a lag.
http://finance.yahoo.com/echarts?s=G...urce=undefined

[nero3]

Re: The $ is getting K I L L E D

Rails vs Silver: Notice the lag:

http://finance.yahoo.com/echarts?s=S...urce=undefined

It's very predictable that rails here to match silver where it is now will move to around 83 dollars (remember the lag). Or up at least two dollars. But probably a lot more. I guess, these shares will increase at least 5 times in value over the next years. These trends will purely be because of the weak dollar.

[lalla]

Re: The $ is getting K I L L E D

if we are close to the chaos point, is it time for tbt? if not, why not?

[jpatter666]

Re: The $ is getting K I L L E D

Rails vs Silver: Notice the lag:

http://finance.yahoo.com/echarts?s=S...urce=undefined

It's very predictable that rails here to match silver where it is now will move to around 83 dollars (remember the lag). Or up at least two dollars. But probably a lot more. I guess, these shares will increase at least 5 times in value over the next years. These trends will purely be because of the weak dollar.

Hmmm....I'm thinking of that old phrase, lies, damn lies -- and statistics.

Not denying the correlation, looks interesting, but what on earth ties silver and rails together?

[WildspitzE]

Re: The $ is getting K I L L E D

The more I think about this, the more I like it, partly because, although this certainly looks bubblicious, the move can't be entirely bubble. Part of what's going on is China buying things like nuclear plant components from Sweden (per Cobben's post, another thread), for example.

To the extent that meaningful investment in things like energy efficiency is occurring (thanks to China's gift to the world), we may actually see a better world economy ahead.

China is formally switching gears into keynesianism, and it has a huge amount of savings left to be pillaged. It will be interesting to see, although be weary of straight line patterns... especially because the switch isn't complete (and their biggest mercantilist target, the american consumer, has just been kicked in the jimmy).

[touchring]

Re: The $ is getting K I L L E D

China is formally switching gears into keynesianism, and it has a huge amount of savings left to be pillaged. It will be interesting to see, although be weary of straight line patterns... especially because the switch isn't complete (and their biggest mercantilist target, the american consumer, has just been kicked in the jimmy).

how do you do that when there are hundreds of millions of them earning less than $2 a day?