The US Dollar - Place your bets now
Swami Syndrome: A proclivity for predicting the future coupled with a blinding disconnect to the fact that a coin toss (or the proverbial monkey) would be more accurate than your lame prognostications.
Swami Charles Gave has polished up his crystal ball and sees all green in a contrarian dollar/euro position:
Jonathan R. Laing, the author of the article, starts out by listing all the negatives stacked up against the US dollar in today’s environment:
Of course, the case against the greenback is invariably couched in apocalyptic terms. America’s continuing budget deficit, for example, is said to betoken U.S. decadence, fueled by fiscal irresponsibility and imperial over-reach. The trade and current-account deficits? They are symptoms of a society that consumes more than it produces, spends more than it saves and relies on poorer nations to finance its profligacy.
Nor, at this point, can a strong case be made for foreign investment in U.S. assets in order to sop up the dollar surpluses in foreign coffers. U.S. gross domestic product growth is slowing. Treasury rates seem headed lower. Interest differentials favor higher-yielding government paper like the German bund. U.S. residential and commercial real-estate prices seem headed further south.
And then he gets to statements from Contrarian Swami Charles:
Thus, it comes as something of a surprise that GaveKal, an international investment research boutique with offices in the U.S., Hong Kong, Paris and Abu Dhabi, recently penned a report lauding the dollar’s prospects against the euro. In fact, in a telephone interview from Paris, firm founder Charles Gave terms the euro “grotesquely overvalued” at its current level. In the next couple of years, he maintains, the euro should fall to its “parity” value of $1.05 to $1.10.
Swami Charles goes on to point out many of the financial negatives in Europe that he believes will weigh against the Euro, and even says the M word!!
Higher birth rates of Muslim populations that have been only imperfectly integrated into European economic and cultural life could pose big problems in the Old World over the next several decades. For one thing, the trend could boost unemployment.
I’m guessing that Swami Charles does not live in Holland. Let’s do some math on that:
Far fewer Euro kids from secular Euros + ever increasing Muslim kids who won’t (or won’t be allowed to) assimilate =
Well let’s say it could be a boon to the car industry.
Other than that, Swami Charles thinks the Euros are in a bit of trouble.
Let’s take a look at the US Dollar chart:
Charts don’t get much uglier than that.
Dollar Bear Maoxian (the Beijing Swami) reports on Swami Charles and his bullish prediction for the US dollar in his post Bucking the Euro trend a bad bet:
Maoxian (the Beijing Swami) has been shouting Sell the Dollar! for quite a while now and advising everyone to as sell all US assets (and run off to a better country, like China I guess). He has surely earned his Swami Stripes on the dollar call.
His guess is as good as the next guy’s (commenting on Swami Charles). It might be wise to wait for the trend to reverse before targetting $1.05 to $1.10.
The Euro is sitting around $1.48, so let’s tag that number for Swami Charles and check back in a few months. As for the Beijing Swami, he has already been consistently correct on the dollar dive for weeks now. We’ll wait to see if he keeps shouting sell when the dollar does a reversal. It has to do one sooner or later, right?
Question 1: If Captain Cliche Obama wins the Presidency, will the Beijing Swami continue to be bearish on the US?
Question 2: Will the dollar/euro debate bring out a record number of Swami prognostications?
Question 3: Should the European countries which adopted the Euro switch back to their traditional currency while the chart is topping? Nations as swing traders - silly I know.
-- Filed November 25, 2007 at 10:40 pm