Custom Search

Monday, January 28, 2008

The Dollar Smile Theory

Morgan Stanley: Economic Re-Coupling Will Boost the Dollar Smile in 2008: “The dollar’s general weakness so far in 2008 gives little support to the 'Dollar Smile' theory. But according to Stephen Jen, Luca Bindelli and Charles St-Arnaud in the Global Economic Forum, Morgan Stanley believes that the Dollar Smile will eventually work, admittedly with a delay.

As opinions among investors change - particularly those on the U.S.'s slowdown being felt primarily in the U.S., and also the low yield premium on USD assets - Morgan Stanley foresees the following effects on the dollar:

"... [a] rally this year against the EUR and the GBP. In turn, the JPY and CHF could rally against the strengthening dollar, for as long as the U.S. is in a recession, which we believe will likely persist through 1H08. One by one, various parts of the rest of the world will start to show signs of a slowdown/deceleration. Even though we are of the view that this ‘economic re-coupling’ will be tentative and partial, financial coupling will likely push investors back into ‘fear mode’ and bond rather than equity flows will, perversely, support the dollar – consistent with our ‘Dollar Smile’ framework.”

All of this is of course based on the assumption that the world’s economies never really de-coupled in the first place… I’ve posted about de-coupling on December 12, 2007: The Global Decoupling Theory is Garbage. On December 17th, 2007 I presented additional data and charts in Asia Tanks.

MacroMan tackles the Dollar Smile theory in his January 7th, 2008 post: Will A US Recession Strengthen The Dollar:

“One possible explanation is an emerging school of thought that a US recession/quasi-recession is actually good for the dollar. According to the proponents of this theory, weak/negative US growth is both damaging to the rest of the world and a catalyst to encourage US investors to bring money back home. The upshot is that there is less demand for foreign assets/currencies and more demand for US assets/currency; hence, the dollar rallies.”

I don't need to tell you what this would mean for commodities and the commodity Bull eh?

Gold, oil? Can you say, "Body Slam?"


Anonymous said...

I agree that these elements are dollar positive, however, with the Fed taking on Toxic asset garbage from the banks through the TAF and the ever increasing Federal deficit which we eventually our foreign neighbors will not be able to support or cant support. Eventually it is going to be race race to the bottom for all currencies as each country fires up the printing presses in an attempt to recover from the Decession of 2008. You also better beleive that the Fed would much rather inflate its way out of that huge federal debt rather than let it grow (i.e. negative inflation rate).


Anonymous said...

I like play online game, I also gw gold and GuildWars Gold, the Guild Wars Gold is very cheap, and use the GuildWars money can buy many things, I like cheap gw gold, thanks, it is very good.

I like play online game, I also buy habbo gold and habbo credits, the habbo gold is very cheap, and use the habbo coins can buy many things, I like cheap habbo credits, thanks, it is very good.

eda said...


replica rolex said...

$75 Replica Rolex Watches sale, Our site provides Rolex replica, replica Rolex Watches, replica breitling, replica Cartier, replica Omega, Tag Heuer Watches. . .more than 100 famous rolex brands"
rolex air king
rolex datejust
rolex day date
rolex daytona
rolex gmt
rolex submariner
rolex yachtmaster
a lange sohne watches
alain silberstein watches
bell ross watches
breguet watches
breitling watches
bvlgari watches
cartier watches
omega watches
patek philippe watches

Unknown said...

nice post!!
We have
tennis rackets
babolat tennis rackets
wilson tennis racquets
tennis racquets
wilson tennis racket
cheap babolat tennis racquets
cheap tennis racquets
with excellent quality!!Welcome to our store.

hanly said...

Excellent post,thanks for sharing.
pdf to jpeg converter
youtube to mp3 converter
Perfect !! Now i add it to bookmark!
Blu-ray Ripper for Mac

Unknown said...

Buy designer Hermes handbags online. Hermes bags buy Hermes Wallets for cheap Hermes Purses online cheap hermes handbags on discount hermes handbags for replica handbags onlie sale.Hermes handbags sale for hermes bags on hermes bags for sale. Hermes bags sale for replica bags on sale. designer hermes handbag buy Hermes bag online. Hermes Wallet on sale Hermes Purses online cheap hermes handbag on discount hermes handbag for replica handbag onlie sale.Hermes handbag sale for hermes bag on hermes bag for sale.Buy onlie.Hermes bag sale for replica bag on sale.

Unknown said...

These louis vuitton handbags
are connected abiding. You will acquire to blot your money already for purchasing these Louis vuitton bags
. You can accrue on abacus added louis vuitton
, accouterment you added actualization and fashionably brash lv" fr

Unknown said...

louis vuitton
brash abridged the bulk of international, but aswell makes the Louis vuitton bags
actualization absolute adapted from acclimatized brands, even louis vuitton handbags
to match, can not bristles the lv"
out of the actualization the affectionate of takes away people's temperament.

Unknown said...

How hermes Thrives in the Recession?
We have always an eye on the handbag hermes . We once talked about the huge handbags hermes fan-Victoria Beckham, and We discussed the differences between Birkin bags and Kelly bags, and we knew that Hermes bags topped the list of Top 10 Timeless Classic Fashion Items. Well, today’s topic will focus on the brand’s strategy under the economic recession.

Bentley GT – A Genuine Piece Of Aviation History
While abounding manufacturers accomplish and bazaar aviators’ Chronomat Evolution alone a few can absolutely affirmation to accomplish watches that in fact are. Chronomat B01 auction like the Omega X-33 and Seamaster 120 Multifunction; the Omega Flightmaster; and the Rolex GMT. And of course, one could not abort to account the Superocean .

Unknown said...

After the lining is through, hermes bag base is hand sewn from the front up to the back using the wax linen threads. Every push of a needle of Hermes Lindy is cautiously done in double saddled stitches. The herme mini holes are completed by the bradawls prior to the stitches and the stitches size dictates for the sizes of the holes.
Along with the daidaihua , you will also receive these following products: free toning belt for your waist and abs, free quality e-books, free online exercise guidelines for you and an online customer support for you 24/7. lida , according to its consumers, lida daidaihua also has no known side effect unlike some other pills that would have side effects such as excess urination, diarrhea and constipation. Just make sure that when you take lida slimming , combine slimming capsule with a meal and exercise for effectiveness. And then watch your fats melt away. slimming capsules is best.

Unknown said...

Christian Louboutin Pumps
michael jordan shoes
Mens Polo Shirts
Mlb Jerseys

Manolo blahnik shoes
jordan basketball shoes
Lacoste Polo Shirts
Nba jerseys

Christian Louboutin Shoes Sale
jordan shoes sale
Wholesale Polo Shirts
Authentic Nhl jerseys
Classic Crochet Uggs
Classic Short Ugg Boots
Christian Louboutin Boots
Classic Crochet Uggs
Classic Short Ugg Paisley Boots
Manolo Blahnik
Classic Short Ugg Paisley Boots
Depths Linen Uggs 1688

Unknown said...

Examine the soles of your shoes. Note where UGG Mini wear has occurred. Most people seem to be amazed that their shoes wear at the rear outer corner. Most UGG Mini boots rearfoot strikers will wear at this part of the shoe. The reason for this, which someday, somewhere a funded study will prove, is that for most heel strikers it is the point Mini ugg boots of first contact of the shoe with the ground. Most people walk and run with their feet slightly rotated from center. Runners, however, also have what is called a narrow base Mini uggs of gait. A narrow base of gait means that the feet contact close to the midline of your body. This creates additional varus (tilting in) of the limb. This results, for the rearfoot striker, in the first point hitting the ground being the outer corner of your shoe. Forefoot wear ugg 5854 may point to an individual who is a sprinter, runs fast, contacts the ground with the forefoot first or all of the above. Uneven forefoot wear may show where one metatarsal is plantarflexed relative to the others or where one metatarsal may be longer than the others. In the presence of significant forefoot wear, you are at risk of stress fractures.

Anonymous said...

Since their popularity pandora sale in Paris during the pandora jewellery uk mid 1920s, they have pandora shop continued to capture the hearts of beautiful pandora 2010 brides across the globe. Nothing pandora jewelry beats the elegant and classic appeal of antique art deco rings together new pandora beads with a mans sweet promise of everlasting love.If you are planning to choose from pandora bead different antique art deco rings and to use them for your wedding proposal, then continue reading this pandora beads sale article. It explains some of the pandora glass beads most striking features of art deco rings as well as some reasons pandora style beads why these one-of-a-kind wedding rings are worthy investments.

Anonymous said...

His clients said other designers have gone too far, cutting too much hair.chi flat iron Dowling is a reasonable approach, because it's the best chi ironpart of the structure of someone's face, and this is really what

Customer wants. chi flat ironsShear Insanity offer free check client's hair, which is possible, hair, and how they show their best lifestyle, custom look.

pandora jewellery said...

These are just cheap pandora a few of the many pandora uk things ladies should take note of pandora jewellery in choosing bridesmaid jewelry. Although cheap pandora jewellery most ladies really have the instinct to have only pandora bracelets superb jewelry to pandora bracelet flaunt with, there are certain things pandora bracelets uk that should also be taken into cheap pandora bracelets consideration.Now that modern day weddings would seem incomplete without the pandora beads bridesmaids wearing this type of pandora bead jewelry. Hence, it is pandora beads uk indeed a must for all bridesmaids to cheap pandora beads walk down the aisle with the dashing bride pandora beads sale also flaunting their own new pandora beads jewelry.

puertas metalicas cortafuegos said...

Oh my god, there is really much useful information here! said...

So, I don't really believe it may have success. said...

I believe everyone ought to browse on it.