Chillin' out till it needs to be funded
Momentum Days lost too..China and Europe pretty busy..The Dollar?
Firstly in terms of other alternates without popping the reserve currency question, everyone now needs to buy some Yuan, some Gold and i guess even now, any commodity can keep you busy counting the coins, but that’s just the investor finally treating the Dollar as a n asset than a base class that you count everything in. to that extent, it is also unlikely anyone will get rid of too many dollars, esp as sovereigns, fools and sundry college kids with investment plans might think and present as choices. Then there is the momentum lost as the budgets are undone, the QE2 fill up is questioned the day it is closed even when the Fed Balalnce Sheet is now the three time hulk dream of Bruce Banner. Of course the debt bill looks huge with an open discussion of $14 trillion for a ceiling but all that fades into nothing as the Dollar remains a strong camp to back.
Where it gets tough, is in my wallet..
As an American I have considerably less to spend today, more of me jobless than ever before, most of my super tricks looking like a bad dream..In Economic facts, consumption spending is down 3% for the first few reports of 2011, Home Sales ( Existing, prices) adjusted down 5% and the worst in ten years and the Euro ready to fund the new kids on the block another $100 billion Euro ( Greece EUR 60 Billion, Ireland EUR 14 billion, the rest, more are coming) With the IMF asunder though, there is another problem. If you treat the island across the pond as a leading indicator, bad inflation and loss of producition is in already and with a bang.
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Of course the UK example is mislaid, its fall in PMI shocking everyone but still only as much as China and China’s inflation and growth monsters talk about an even growth too, which is more the model with this much of liquidity.. Wonder why we got attracted to derivatives, never because the markets liquidity kept us nbusy and even with QE2 drawing to close, nothing’;s changed with an extra $2 trillion shopping around. Retail consumption though is now dull, jobs lesser and growth skipping even as election spending takes root and a 2.7% inflation not looking like enough to canoodle up some great jobs numbers..
The Chicago PMI was the worst and will remain our first choice for leading indicators soup of the day (2011) Home sales are likely to keep drifting down as no credentialled investors are around to pick up the bargains and hey condos are better anyway..or new buildings..which is why I am happy for LA.
China and its currency
Being busy bothering china about the Yuan is actually increasingly an inane emotional baggage as the problem becomes much more clearer. Real Dollar holdings are not being sold but are still losing market share with Yuan buying up euro bonds from Greece, Ireland, and everyone else and also 20% of China’s trade i.e. more than 6% of the global trade now being committed in Yuan, somemore still in the Euro..that is the more pressing problem to which America will probably serialise in its Capitol Hill meetings only in 2012
But what are you going to buy? ..the Sterling..
Kaput! Simply kaput as the Sterling breaks all downward barriers in an inflation scenario, the lazy monster happy to sail without work or employment..the Aussie and the NZ unable to live the fun times with currency appreciation causing a lot of heartburn and now currency burn..the Canadian unable to ercover without big brother and the Mexico, SA and the BRICs busy finding their own currency a candidate and firming up Gold prices in the global markets. Most importantly, even when the Treasury sells $1 billion which is not even pocket change or enough for a coin star anymore..the markets take the Dollar down to its new found levels easy..So Sell the Dollar stay invested in the USA remains the clarion call and that does make 2011 very dull as nothing’s changed at all.
And this one maybe hurts more than you think
Though growth pegs have to move up after persistent inflation and the slow off take too worrying to sit around, a bigger problem is that A. The Reform Calendar on both sides of the pond is incredibly messy and incredibly indifferent to the facts and B. The banks esp the functioning priivate enterprises seem to all have a lot of time to twiddle thumbs and sit on it, which even as leading indicators go, shows me a lot of vacant parking lots more than a year down the line..and the dollar’s slow depreciation which keeps the country or the eternal QE3 preferred by Treasury Bears looking to be the cardinal mistake of a double play but the the Brookings institute, the Reagan Policy ?Institute and CVapitol hill have been having a lot of time to see it fail, everywhere.