Tuesday, April 8, 2008
The only currency worse than the US$ - The Euro!!
The housing market in Europe is starting to wobble. For now the ECB is holding onto their inflation fighting mantra, but the fat lady is getting warmed up and may have even begun to sing.
When, not if, the ECB begins to cut rates the cover will be Europe's housing situation... but the real reason will be to help the U.S. Fed bail out the the American banks and help support the $. In the long run that strategy is doomed, and I hope to profit handsomely from it, but in the mean time the strategy will more than likely get a little traction and I think you have to pay attention to the probable short term outcomes - not least because they might cause you to take your eye off the ball for the real, long term play.
If you have been reading my stuff you know I hate the U.S. $, and I have for years. I gotta say that the Euro, at today's exchange rate, is even less appealing than the U.S. $, and if the ECB begins to cut, the Euro could plunge vs the $. Also, you know my saying: "markets zig and zag, they don't zig and zig and zig" - and the commodity markets have been zigging pretty hard again.
When the ECB cuts that first time and the Euro sags and the Dollar moves hard to the upside it is VERY likely that many of the commodities are going to get rocked. I am preparing now for that opportunity. I don't give specific advice in this forum, but you can figure this one out.
As my fellow Guru and Master of Time, Space, and Dimension, the good Dr. Salani always reminds me: "At the moment you SHOULD be buying, you really won't want to". Well the opposite also holds true. Sometimes you gotta clear the decks to be in a position to be able to catch "chicken little" by the neck. When the ECB cuts, there will likely be a host of commodity "chicken littles"... Don't miss this, and don't listen to the gloating jackasses on CNBC declaring the commodity bull market dead on that day.
You heard it here, before the ECB makes its move.
Yours for a better (entry price after the ECB cuts rates) world,
Mentatt (at) yahoo (d0t) com
P.S. The ECB's recalcitrance will come to bite them hard. By keeping rates high relative to the U.S. they have, in my opinion, caused themselves some real harm. Then again, the ECB does not have the same mandate as the U.S. Federal Reserve.
Posted by The Short Story Man at 6:29 PM