Can the dollar rally straight up with the market?

Maverick74 · Dec 11, 2016

victorycountry said:
In another thread, someone is saying that US interest rate change could bring the same level of impact as Brexit. I know it's been 10 years since they last raised the interest rate but do you expect that it will bring the same price impact as Brexit, Maverick?

You do know the Fed raised a few months ago right? We rallied on that event. The market needs higher rates.

Maverick74 · Dec 11, 2016

tortoise said:
What of the effect of rising rates on debt service?

We are so far below historical norms on rates. It's like asking what is the economic effect of raising minimum wage .05 an hour on the avg worker. No effect.

victorycountry · Dec 11, 2016

Maverick74 said:
You do know the Fed raised a few months ago right? We rallied on that event. The market needs higher rates.

Yes, that was last year around this time

I hope it's not just going to be a rally this time. On weekly chart for USDJPY, US dollar is definitely regaining it's strength. Could re-test 126 level again

victorycountry · Dec 11, 2016

Maverick74 said:
You HAVE to be long the dollar in this environment.

Mr. Maverick, Will you take long positions only for short-term (daily closing) or will you take some long positions for longer than a day this time at the announcement this week?

Maverick74 · Dec 11, 2016

victorycountry said:
Mr. Maverick, Will you take long positions only for short-term (daily closing) or will you take some long positions for longer than a day this time at the announcement this week?

I don't have any currency exposure at the moment. End of year is not the best time to enter new positions fyi.

BikerTT · Dec 15, 2016

I'm not trading as of end of this week. Markets are likely to go sideways until January. No one wants to be worrying about a big position when the Christmas dinner is being served!

CyJackX · Dec 15, 2016

BikerTT said:
I'm not trading as of end of this week. Markets are likely to go sideways until January. No one wants to be worrying about a big position when the Christmas dinner is being served!

Sell premium?

tortoise · Dec 27, 2016

Maverick74 said:
We are so far below historical norms on rates. It's like asking what is the economic effect of raising minimum wage .05 an hour on the avg worker. No effect.

You must be joking.

We are so above historic norms on debt, any increase in interest rates will act like Archimedes' level on debt service expense.

Maverick74 · Dec 27, 2016

tortoise said:
You must be joking.

We are so above historic norms on debt, any increase in interest rates will act like Archimedes' level on debt service expense.

You misread my post. I said we were below historical norms on interest rates, not debt level. Rates are VERY far below historical norms. But you are incorrect when you say "any" increase. We are still a long ways away from increases having a destructive effect on our debt service. An excel spreadsheet would suffice.

tortoise · Dec 31, 2016

Maverick74 said:
You misread my post. I said we were below historical norms on interest rates, not debt level. Rates are VERY far below historical norms. But you are incorrect when you say "any" increase. We are still a long ways away from increases having a destructive effect on our debt service. An excel spreadsheet would suffice.

No I read your post correctly. My point was that debt levels are so high that interest rates must remain abnormally low for them remain serviceable.

Under current law, the Congressional Budget Office projects that net interest costs will ratchet from $270 billion in 2017 to $712 billion in 2026. It projects those payments will be the third largest category in the federal budget by 2028, second largest category in 2046, and the single largest category in 2050.

But don't take my word for it:

https://www.cbo.gov/publication/51841