Friday, January 30, 2009

Will Europe Collapse??

I have turned my focus from the potential weak dollar to the ever weakening Euro. While our economy is not in great shape I am focusing on how much weaker the Euro Zone can get. I watch the Yen hammer the Euro last night and will be examining the impact that a much weaker Euro Zone will have on our economy and how I can make trades based on that theory.

Natural gas firmed yesterday and I am hopeful that we will see some strength in commodities as I don't think we can see our averages move up until we see commodities show some signs of life. I think gold to $1000 is now a given and it could easily do it in the month of February. It is ever so strange to see the dollar strengthen and gold get stronger at the same time. If that is not a reason to be more cautious in this trading environment, you will perhaps never find a reason.

I laughed my butt off last night as Larry Kudlow basically said we are in for a rally if the government won't mess it up. That is like giving a weather forecast that says clear to partly cloudy with a chance of rain. Covers most of the bases. Why would we rally here is what I have been asking myself. Other than a short covering rally, I don't see any positive news. When in America have traders been so dependent on news out of the government? I don't think we will see the dollar collapse anytime soon. That will have a good short term impact on inflation---but don't worry, I haven't changed my long term outlook that we are headed for much higher inflation.
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