Higher rates may save the dollar; Bloomberg reports in the link below.
But what's good for the dollar?
WILL NOT BE GOOD FOR STOCKS OR BONDS or anything else for that matter!
Indeed, everyone has been waiting for the "other shoe to drop" in the bond market since May of this year.
Despite several rates hikes, and assurances of plenty more where that came from; the bond is up and rates are down, or at least steady. Probably because of Asian Central Banks.
BUT ANY RETURN TO NOMRALCY FOR THE DOLLAR COULD BE NEGATIVE FOR ALL THE "PAPER" UNDERNEATH.
WHY BUY STOCKS IF THEY ARE HEADING DOWN!
WHY BUY BONDS IF THEY ARE HEADING DOWN!
INDEED, WHY BUY THE DOLLAR, EVEN AT HIGHER RATES, IF THE UNDERLYING US ECONOMY IS ON A DOWNWARD PATH?
A paradox perhaps.
Well there is always "speculation" that everyone else will buy the dollar so perhaps you buy it first.
BUT, TO REALLY JUICE FOREIGN APPETITE FOR DOLLARS, RATES ARE GOING TO HAVE TO BE MUCH MUCH HIGHER!
ESPECIALLY SINCE THOSE VERY SAME RATE HIKES ARE GOING TO "KILL" THE DOMESTIC US ECONOMY.
REMEMBER, THERE IS THAT LITTLE HOUSE-DEBT REFI BUBBLE HIDING IN THE CORNER......LIKE DUMBO!
THERE ARE ALL THOSE JUNK BONDS OUT THERE NEEDING TO BE "RE-PRICED."
THERE IS NEW EUPHORIA AMONG KONGRESSIONAL REPUBLICANS TO REALLY REALLY: LOOT, POLLUTE AND SCOOT THIS TIME!
HEY, IT'S A MANDATE, BUBBA HAS SPOKEN!
NET-NET?
BUY THE DOLLAR~~BUT DON'T BUY THE US ECONOMY IN 2005!!
Hmmmm.......maybe those newly popular "higher rate" dollars could go into OIL AND GAS SPECULATION!! Ya think?
Or maybe, we could fop-off more real estate on the "foreign suckers!"
Wanna buy some "rental property?" Real Cheap?
ALAS, THE GOOD NEWS DOLLAR COULD BE BAD NEWS FOR EVERTHING ELSE IN 2005!
http://www.bloomberg.com/news/markets/currencies.html
