Well, I managed to catch the replay of Prechter's interview last night. Bloomberg publishes an excerpt [1] of the video on their website but without the part when Prechter was talking about the Dollar. We are publishing the complete interview here.
If Prechter is right about the Dollar, Gold and commodities will go down, down, down...
bhc investment:
- Hmm... after watching the interview myself and reviewing some of my recent work [2], I do find Prechter's timing on the Dollar very interesting.
- The Dollar does seem to be pivoting before strengthening against the euro and Pound (not shown on chart), but it is weakening against the Yen -- in other words, Prechter can be right on his Dollar call in the short and medium terms, so is our call on the Yen. Also, the US Treasury is strengthening, as we have been anticipating. As the US Treasury is priced in Dollar, buying in the US government bond is similar to buying in the world's reserve currency.
- I think there are 2 important features here: firstly, the reverse of the Yen Carry trade is continuing. Secondly, liquidity within the US is diversifying away from stocks and going into safety -- US Treasury. This can be a precursor to the next decline in stocks that we have been anticipating all along [4]. Moreover, the decline in the Chinese stock markets, which we have been anticipating as well, can also give a temporary boost to the Dollar -- as traders and investors sell their foreign stocks before returning back to the US. However, we at bhc investment don't see this as a major trend change in the Dollar [3].
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