A Few Random Thoughts

The more I think about what is going on the more I think we will come out of this sooner rather then later. Remember timing is all relative but I think that we will see a stabilized stock market by the first quarter of next year and that will be the beginning of a turn around.

The economy is clearly weak and that is what is driving stocks on an erratic pace downwards. No longer is the market concerned about credit. There is a bit of lending going on in the interbank market. Libor rates have more normalized and Governments worldwide are all ensuring that everyone knows that they are aware of the problem and taking steps to correct it. Just today the U.S. government announced an effort to directly help home owners. The new efforts involve the speeding up the process by which homeowners can renegotiate there loans. This is a big step and one which is long over due.

With this slow economy will come lower rates. We have seen the beginning of this and believe me it is only the beginning. Worldwide rates are coming lower and as such I think being long high yielding currencies could be profitable. I am cautiously shorting dollars against Argentina (very cautiously here) Brazil, Mexico and Chile. I think rates will eventually come lower in all of these countries.

Good Luck and Good Currency Trading.