about currencies – The Debt Spiral – Debt begets debt until it doesn’t. I have watched a noticeable change in the mood of many investment banks (yes, they are all technically commercial now), money managers, and large institutions as market values have rebounded and the edge of the cliff seems like a distance memory. The reflation has occurred with a vengeance and it seems that the calm has returned. The real question to ask is, “Now what?” – Surly Trader
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a collection of great articles – What will be the status of the dollar in 2025 — and does it matter? – What Matters @ McKinsey
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WILL THE DOLLAR CONTINUE TO RALLY? – The US Dollar index has made a nice move higher since the end of November with a gain of about 5%. The important part about this rally is that the index has broken the long-term downtrend that it had been in since early 2009 – Bespoke Investment Group
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Richard Bernstein’s 10 Predictions For 2010 – Richard Bernstein –
1. Stock and bond market returns in the US will again be positive.
2. The US dollar is likely to meaningfully appreciate once market-driven short-term rates begin to rise.
3. US dollar “carry trades” could get killed as 2010 progresses and the US dollar appreciates. Once accounting for leverage, hedge fund performance will likely trail long-only equity performance.
Read them all at Business Insider The Money Game
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Barry Ritholtz – still bullish on stocks, but not for the long term – Posted by Prieur du Plessis – … Ritholtz expects the market to continue to go higher in the first part of 2010, suggesting 1,250-1,300 as an upside target for the S&P 500, but still thinks we are in a cyclical (short-term) bull market within a secular (long-term) bear market, which began in 2000. “The goal from now until let’s call it 2015 is to preserve capital – see if you can make a little money here or there – but be ready for the next 15-to-20 year bull market,” he said. … – Investment Postcards from Cape Town
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Thoughts on PIMCO:
Risk Reversal Continues – Since one of the top Bloomberg stories today focused on Bill Gross’ highest cash position … The article focused on the idea that Bill Gross foresees largely rising rates in the United States in 2010. That idea might have some merit, but it would probably be more likely that Gross expressed that view by shorting treasury futures and interest rate swaps. I believe the reason that he is getting cautious is the same reason that I have focused on the rapid decline of Greece and rapid rise of the dollar. – Surly Trader
Pimco lightens up on U.S. debt – Tim Iacono – … The folks at Pimco are generally early on calls like this, but they’re almost always right (remember how they pleaded for Bernanke to cut rates in 2008-2009?) all the more reason to lighten up on both Treasuries and the modern day equivalent – mortgage backed securities. … – The Mess That Greenspan Made
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Thoughts from the Frontline Weekly Newsletter – The Age of Deleveraging – by John Mauldin – … While Obama is urging banks to lend, bank regulators are telling banks to raise capital and shore up their balance sheets. One way they do that is to lend less to consumers and businesses and invest in US government bonds. …