Monday, December 01, 2008

Sales Better....and EM (and Yield Monkey's) should benifit

Just a few quick thoughts to start the week. Initial reports seem to be pointing toward Black Friday sales being slightly better then last year and much better then expected. Does it continue? I do not know. I do know that I and most of the people I know are cutting back in one way or another.

Now on to some trading views. I still look for global interest rates to move lower. U.S. have done so and even if the Fed does not officially lower anymore the market is taking it lower themselves. Fed effective are consistently below 1.00% on a nightly close. This has flattened the yield curve at extremely low levels. What is a fund manager to do? Go for yield wherever they can. If I am correct and the market quiets down look for currency's such as Mexico,Chile, Brazil....or Heck the entire Latin American region to do better. I will be entering into small short dollar positions in this region today. There is an article on BLOOMBERG NEWS which talks about Funds in search of yield looking to enter riskier waters.

In the best year for Treasuries since 2002, fund managers who only buy government bonds are seeking permission to invest in corporate debt they considered toxic just a month ago.

Americans have short memories and as such this does not surprise me. With a new year approaching, traders are getting their 2009 budgets. You need to take risk to achieve a budget and I look for higher yielding assets to perform better.

My "big picture view" going into 2009 is, Global yields lower and a weaker dollar. I still think the Euro heads toward 1.4500 by the first quarter of 2009.

Good Luck and Good Currency Trading.



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