Help . . . Is The £ Going Into Free-fall?

[MJP]

Macro in the UK's looking positively micro for '09. That said, it's all relative and the domino's are really starting to fall in the US. They're big one's too. The first auto industry bailout is likely to buck stocks, the second and the third later in 2009 will rattle the market. The realisation that bailouts don't work will show the bond market to be on the money . . . not that there will be any real money.

Under Obama the printing presses will be red hot. I'd buy equities, but only in ink and paper manufacturers.

Brown is the wild card. That guy is completely mental. ZERO RATES! will destroy lending/liquidity ratios of the UK banks, which are already running some 20+:1. But here's the big disconnect. Base rates will mean zilch. Market forces will take over the pricing of risk and real interest rates, money market rates will soar. Watch the LIBOR spread widen through 2009.

At some point base rates will have to rise in response to the lack of interest in UK government bonds. This is when the S really HTF.

There's too much evidence out there suggesting any deflation will simply be a temporary liquidation and product dumping. Expect a sudden surge of inflation late 2009. Not hyperinflation but high inflation. Commodities may become a bubble again. The bankers need another bubble to releverage their desperate positions on housing loans. They'll go for oil once it hit $25 bbl.

Thailand is really a bit of an unknown in these uncharted waters. To think their banks don't really have exposure to toxic debt (mainly CDO and MBS) I think is naive. Many poisons yet to hatch out in LOS, both economic and political. To have a country without adequate leadership (or the perception of adequate leadership, Brown et.al) at this point in time could prove disasterous.

I'm bearish on Thai Baht at this time. Not expecting it to collapse, but certainly not expecting it to strengthen from this point on. Probably be proved wrong, but my guess is the markets will see emerging market currency as a bad risk and price it accordingly.

MJP, Re commodities... do reckon there's any merit in getting the materials for the new house bought in (steel etc.) if signs of a hike in prices appears next year?

It's a balance.

If you buy now at a low GBP FX rate you lose. But if you wait for the rate to improve, it's probably meant that USD has gone down thus driving commodities up.

Just because the market rate for steel is low (and it is right now), can you achieve those prices in the domestic consumer market?

I'd just get on and build it.

[MJP]

Count yourself lucky I havent started my beer/baht purchasing power graphs.

gawd bless sterling! i want to buy my new 100,000 baht toy!

Which is?

[chiang mai]

Pound up , gold up - perhaps ?? the start of the dollar decline -

The dollar decline started over two weeks ago. It is expected that it will break hard into this next 1-10 day period into its 40 week cycle lows. That low will determine the character of its next 40 week trading period.

I've asked the question before generally but never of you directly so maybe you can supply some insight: from a historical perspective, are there not some peculiar characteristics associated with USD performance in the month of December that tends to reverse in January - it's akin to the FTSE surge at year end that results from "bed and breakfast" rollovers?

[lannarebirth]

Pound up , gold up - perhaps ?? the start of the dollar decline -

The dollar decline started over two weeks ago. It is expected that it will break hard into this next 1-10 day period into its 40 week cycle lows. That low will determine the character of its next 40 week trading period.

I've asked the question before generally but never of you directly so maybe you can supply some insight: from a historical perspective, are there not some peculiar characteristics associated with USD performance in the month of December that tends to reverse in January - it's akin to the FTSE surge at year end that results from "bed and breakfast" rollovers?

I tried to find a chart showing how the $USD trades during each month historically, but my search proved fruitless. There's one out there somewhere, I just can't find it right now. I have read (since you posted this) two opinions that state. "December is typically a poor month for the US Dollar" and "The US Dollar tends to trade higher into year end and during the first few months of a new presidency".

I don't know or care which is correct, and neither should you.

[chiang mai]

Pound up , gold up - perhaps ?? the start of the dollar decline -

The dollar decline started over two weeks ago. It is expected that it will break hard into this next 1-10 day period into its 40 week cycle lows. That low will determine the character of its next 40 week trading period.

I've asked the question before generally but never of you directly so maybe you can supply some insight: from a historical perspective, are there not some peculiar characteristics associated with USD performance in the month of December that tends to reverse in January - it's akin to the FTSE surge at year end that results from "bed and breakfast" rollovers?

I tried to find a chart showing how the $USD trades during each month historically, but my search proved fruitless. There's one out there somewhere, I just can't find it right now. I have read (since you posted this) two opinions that state. "December is typically a poor month for the US Dollar" and "The US Dollar tends to trade higher into year end and during the first few months of a new presidency".

I don't know or care which is correct, and neither should you.

Thanks, the second chorus of Rule Brittania it is then!

[lannarebirth]

Pound up , gold up - perhaps ?? the start of the dollar decline -

The dollar decline started over two weeks ago. It is expected that it will break hard into this next 1-10 day period into its 40 week cycle lows. That low will determine the character of its next 40 week trading period.

I've asked the question before generally but never of you directly so maybe you can supply some insight: from a historical perspective, are there not some peculiar characteristics associated with USD performance in the month of December that tends to reverse in January - it's akin to the FTSE surge at year end that results from "bed and breakfast" rollovers?

I tried to find a chart showing how the $USD trades during each month historically, but my search proved fruitless. There's one out there somewhere, I just can't find it right now. I have read (since you posted this) two opinions that state. "December is typically a poor month for the US Dollar" and "The US Dollar tends to trade higher into year end and during the first few months of a new presidency".

I don't know or care which is correct, and neither should you.

Thanks, the second chorus of Rule Brittania it is then!

Still can't find any monthly average bar charts, but the seasonal charts may be of interest to you. Sample data not really long enough for my liking but you can make of it what you will:

http://www.seasonalcharts.com/img/ZUTEXTEN...onalitaet_e.pdf

http://www.spectrumcommodities.com/educati.../charts/dx.html

[SomNamNah]

Count yourself lucky I havent started my beer/baht purchasing power graphs.

gawd bless sterling! i want to buy my new 100,000 baht toy!

Which is?

one of these! - thai made though. maybe.

with the CM club / awesome expat john : http://paraglidetv.com/videos/paramotor-ge...motor-club.html

Edited December 9, 2008 by SomNamNah

[So1DoG]

After reading this thread for a while now i feel like i might top myself.

So much doom and gloom.

Infact from reading some posts people sound like there actually enjoying it.

Negativiity is a bad thing in life. People should always try and look on the bright side.

[SomNamNah]

Sorry you feel depressed.

Indeed it could be worse. Which is why we are watching the trend.

But for my parents in the UK, its going to be a cold hard winter- luckily they have log fires, as they cannot afford heating. For them i fear greatly. For me, im only 35, and have been priced out of the UK housing market for most of my life... for me the only decent future is outside of the UK - an adventure!

It is tragic though Soidog, the world largest western generation - the baby boomers are facing a terrible time if the markets/pensions meltdown even more.

I dont think anyone with sterling is enjoying this, its not like we have an easy country to be poor in!

Anyway, the bright side you are right.. all things must pass, could be worse, we could be Thai's living under a 'mess' with only thai baht in the bank

My immediate family lost all its money and possesions in:

1917

1945

1997

2009?

same old same old. Im still alive!

Edited December 9, 2008 by SomNamNah

[chiang mai]

After reading this thread for a while now i feel like i might top myself.

So much doom and gloom.

Infact from reading some posts people sound like there actually enjoying it.

Negativiity is a bad thing in life. People should always try and look on the bright side.

I'm sorry you feel that way because that's really the opposite of what the thread is about. I think this thread is about recognizing there's a problem and doing something constructive to offset its effects. It's also a learning process (for me) in as a much I am trying to study Forex and currency behaviors and when it's your personal income that's affected it has a certain added intensity. The alternative of course is to ignore it and hope the problem goes away but that seems like a very dangerous thing to do. So yes, I am looking on the bright side, very much so but I am also learning and making some money at the same time. Am I enjoying it? I suppose I am simply because I'm involved in the process but frankly I would much rather the problem didn't exist in the first place.

[chiang mai]

Sorry you feel depressed.

Indeed it could be worse. Which is why we are watching the trend.

But for my parents in the UK, its going to be a cold hard winter- luckily they have log fires, as they cannot afford heating. For them i fear greatly. For me, im only 35, and have been priced out of the UK housing market for most of my life... for me the only decent future is outside of the UK - an adventure!

It is tragic though Soidog, the world largest western generation - the baby boomers are facing a terrible time if the markets/pensions meltdown even more.

I dont think anyone with sterling is enjoying this, its not like we have an easy country to be poor in!

Anyway, the bright side you are right.. all things must pass, could be worse, we could be Thai's living under a 'mess' with only thai baht in the bank

My immediate family lost all its money and possesions in:

1917

1945

1997

2009?

same old same old. Im still alive!

I wish I only had Thai Baht in the bank!

Sorry to hear about your family's misfortunes, sounds like you have the right attitude though, even if you do try and chart beer prices GBP and microlite prices on a single chart.

[SomNamNah]

LOL, i meant to say lost everything to the banks in 1987, the last (uk) crash. My parents have been on the wrong side of both waves of recession.. ie: make money upto the peak, then lose it all on the collapse! Feel rather smug i sold my house on the top of the bubble, although i did feel like a dodgy car salesman, almost knowing the crash was coming... 100% mortgages <deleted>!

Edited December 9, 2008 by SomNamNah

[MJP]

Count yourself lucky I havent started my beer/baht purchasing power graphs.

gawd bless sterling! i want to buy my new 100,000 baht toy!

Which is?

one of these! - thai made though. maybe.

with the CM club / awesome expat john : http://paraglidetv.com/videos/paramotor-ge...motor-club.html

Please don't tell me he's going to try and fly the elephant!

[MJP]

Sorry you feel depressed.

Indeed it could be worse. Which is why we are watching the trend.

But for my parents in the UK, its going to be a cold hard winter- luckily they have log fires, as they cannot afford heating. For them i fear greatly. For me, im only 35, and have been priced out of the UK housing market for most of my life... for me the only decent future is outside of the UK - an adventure!

It is tragic though Soidog, the world largest western generation - the baby boomers are facing a terrible time if the markets/pensions meltdown even more.

I dont think anyone with sterling is enjoying this, its not like we have an easy country to be poor in!

Anyway, the bright side you are right.. all things must pass, could be worse, we could be Thai's living under a 'mess' with only thai baht in the bank

My immediate family lost all its money and possesions in:

1917

1945

1997

2009?

same old same old. Im still alive!

Same as that.

Old chap went bust in 1991 recession. I'm priced out of the UK market. Well, I have a pathological fear of debt and have to buy everything including houses in cash.

A depression is coming. But to be honest, we could not have kept going like we were. The 'boom' years were not really good for anyone.

[Bizz]

In recent days the cross has made a series of attempts to move back above 1.1625 and to get below 1.1450, all to no avail but, it must be said that, given how far the currency has fallen in the last year you would have thought that there might be the odd buyer out there. The fact that sterling keeps slipping from ledge to ledge with no real attempts to step ‘up’ does not bode well for longer term stability.

Virtually every chart you look at shows the pound in long term decline and now that the artificial prop of ‘high’ interest rates has been removed it is difficult to see what would tempt a long term buyer to contemplate a sterling long

[chiang mai]

Sorry you feel depressed.

Indeed it could be worse. Which is why we are watching the trend.

But for my parents in the UK, its going to be a cold hard winter- luckily they have log fires, as they cannot afford heating. For them i fear greatly. For me, im only 35, and have been priced out of the UK housing market for most of my life... for me the only decent future is outside of the UK - an adventure!

It is tragic though Soidog, the world largest western generation - the baby boomers are facing a terrible time if the markets/pensions meltdown even more.

I dont think anyone with sterling is enjoying this, its not like we have an easy country to be poor in!

Anyway, the bright side you are right.. all things must pass, could be worse, we could be Thai's living under a 'mess' with only thai baht in the bank

My immediate family lost all its money and possesions in:

1917

1945

1997

2009?

same old same old. Im still alive!

I have a pathological fear of debt and have to buy everything including houses in cash.

I've been in a "non credit" mode for eight years and it makes total sense to me, it's not about not being able to afford something or an inability to get credit, it's about personal discipline and what makes sense. I have credit cards that I use at times but the debt never remains for more than three weeks. Keep up your so called pathological fears!

[MJP]

Sorry you feel depressed.

Indeed it could be worse. Which is why we are watching the trend.

But for my parents in the UK, its going to be a cold hard winter- luckily they have log fires, as they cannot afford heating. For them i fear greatly. For me, im only 35, and have been priced out of the UK housing market for most of my life... for me the only decent future is outside of the UK - an adventure!

It is tragic though Soidog, the world largest western generation - the baby boomers are facing a terrible time if the markets/pensions meltdown even more.

I dont think anyone with sterling is enjoying this, its not like we have an easy country to be poor in!

Anyway, the bright side you are right.. all things must pass, could be worse, we could be Thai's living under a 'mess' with only thai baht in the bank

My immediate family lost all its money and possesions in:

1917

1945

1997

2009?

same old same old. Im still alive!

I have a pathological fear of debt and have to buy everything including houses in cash.

I've been in a "non credit" mode for eight years and it makes total sense to me, it's not about not being able to afford something or an inability to get credit, it's about personal discipline and what makes sense. I have credit cards that I use at times but the debt never remains for more than three weeks. Keep up your so called pathological fears!

I'm 33, and without debt I've managed to build two houses in Issan, buy a 1.7rai plot overlooking Bang Saray, buy farmland in Issan, keep a business going in the UK . . .

I can't understand how people manage to get into such horrific debt?

The UK became the centre of the 'I want everything and I want it now' culture. Made me sick. I can't stand materialism either. Don't get me wrong, I love to make money but for reasons of future security not to ponce round in some silly motor car.

Nice one CM.

[LaoPo]

I'm 33, and without debt I've managed to build two houses in Issan, buy a 1.7rai plot overlooking Bang Saray, buy farmland in Issan, keep a business going in the UK . . .

I can't understand how people manage to get into such horrific debt?

The UK became the centre of the 'I want everything and I want it now' culture. Made me sick. I can't stand materialism either. Don't get me wrong, I love to make money but for reasons of future security not to ponce round in some silly motor car.

Nice one CM.

I haven't followed the discussion but: Good on you MJP; but isn't building 2 houses and buying 1.7 Rai in Isaan a bit different than in the UK ?

LaoPo

Edited December 9, 2008 by LaoPo

[MJP]

I'm 33, and without debt I've managed to build two houses in Issan, buy a 1.7rai plot overlooking Bang Saray, buy farmland in Issan, keep a business going in the UK . . .

I can't understand how people manage to get into such horrific debt?

The UK became the centre of the 'I want everything and I want it now' culture. Made me sick. I can't stand materialism either. Don't get me wrong, I love to make money but for reasons of future security not to ponce round in some silly motor car.

Nice one CM.

I haven't followed the discussion but: Good on you MJP; but isn't building 2 houses and buying 1.7 Rai in Isaan a bit different than in the UK ?

LaoPo

Absolutely old chap. That's why I did it. (BTW, 2 houses Issan, 30 rai farmland and the expensive bit was the 1.7 Rai overlooking Bang Saray Bay - bit posh for the likes of me that one).

I've got a very small flat in South West England. It's so small in fact, it's like I'm wearing it. After I got married to ball-and-chain and had a kiddy, we looked at the option of the UK. Now, I knew long ago that the UK was finished. The costs of real housing here went berserk, people just did not understand that it may be possible to service a £300k mortgage this year, but as soon as it all went 'pear' this was going to be an impossibility.

So, looking to the future, future, future and never being at home in the UK (because I work regeneration sites and I'm rarely there) I decided that once the UK was over, as it is now, add to that I had no long term plans here, it was time to get things going elsewhere.

I took advantage of the strong Pound (changed up £100k at 75.75) and went about building a family infrastructure in Thailand. Now, this could all go terribly wrong if ball-and-chain decides to do a 'woman', but I've been bizarrely lucky in this respect.

Many people retire outside the UK anyway, so let's skip the expensive bit in the middle (home ownership in the UK) and move straight on to where retirement lay.

I was all about value for money. That same plot I have in Bang Saray, if it was in Cornwall/Devon would have been 30 times the price?

I need to get on and build the big one there, had it planned for 2009, but that's on hold whilst I wait for 3 jobs in Taiwan to come off, starting probably in February. Things globally are looking like a depression right now, so I want to stay in cash.

Either way, I have always avoided debt. I don't even have a cheque book! That way, you may go through tough times saving, but you'll be much better off in the end, not having to dedicate half your life to servicing debt.

[LaoPo]

Either way, I have always avoided debt.

if there were more like you, the world wouldn't be in such a deep <deleted>. Watch your steps in LOS though...real estate and land will be up for sale for peanuts in the next one, two and three years.

LaoPo

[neil324]

Sorry you feel depressed.

Indeed it could be worse. Which is why we are watching the trend.

But for my parents in the UK, its going to be a cold hard winter- luckily they have log fires, as they cannot afford heating. For them i fear greatly. For me, im only 35, and have been priced out of the UK housing market for most of my life... for me the only decent future is outside of the UK - an adventure!

It is tragic though Soidog, the world largest western generation - the baby boomers are facing a terrible time if the markets/pensions meltdown even more.

I dont think anyone with sterling is enjoying this, its not like we have an easy country to be poor in!

Anyway, the bright side you are right.. all things must pass, could be worse, we could be Thai's living under a 'mess' with only thai baht in the bank

My immediate family lost all its money and possesions in:

1917

1945

1997

2009?

same old same old. Im still alive!

I have a pathological fear of debt and have to buy everything including houses in cash.

I've been in a "non credit" mode for eight years and it makes total sense to me, it's not about not being able to afford something or an inability to get credit, it's about personal discipline and what makes sense. I have credit cards that I use at times but the debt never remains for more than three weeks. Keep up your so called pathological fears!

I'm 33, and without debt I've managed to build two houses in Issan, buy a 1.7rai plot overlooking Bang Saray, buy farmland in Issan, keep a business going in the UK . . .

I can't understand how people manage to get into such horrific debt?

The UK became the centre of the 'I want everything and I want it now' culture. Made me sick. I can't stand materialism either. Don't get me wrong, I love to make money but for reasons of future security not to ponce round in some silly motor car.

Nice one CM.

Funny enough m8 i had you down as an old fart Mr Parry..........

[MJP]

Sorry you feel depressed.

Indeed it could be worse. Which is why we are watching the trend.

But for my parents in the UK, its going to be a cold hard winter- luckily they have log fires, as they cannot afford heating. For them i fear greatly. For me, im only 35, and have been priced out of the UK housing market for most of my life... for me the only decent future is outside of the UK - an adventure!

It is tragic though Soidog, the world largest western generation - the baby boomers are facing a terrible time if the markets/pensions meltdown even more.

I dont think anyone with sterling is enjoying this, its not like we have an easy country to be poor in!

Anyway, the bright side you are right.. all things must pass, could be worse, we could be Thai's living under a 'mess' with only thai baht in the bank

My immediate family lost all its money and possesions in:

1917

1945

1997

2009?

same old same old. Im still alive!

I have a pathological fear of debt and have to buy everything including houses in cash.

I've been in a "non credit" mode for eight years and it makes total sense to me, it's not about not being able to afford something or an inability to get credit, it's about personal discipline and what makes sense. I have credit cards that I use at times but the debt never remains for more than three weeks. Keep up your so called pathological fears!

I'm 33, and without debt I've managed to build two houses in Issan, buy a 1.7rai plot overlooking Bang Saray, buy farmland in Issan, keep a business going in the UK . . .

I can't understand how people manage to get into such horrific debt?

The UK became the centre of the 'I want everything and I want it now' culture. Made me sick. I can't stand materialism either. Don't get me wrong, I love to make money but for reasons of future security not to ponce round in some silly motor car.

Nice one CM.

Funny enough m8 i had you down as an old fart Mr Parry..........

Yer funny Neil.

How are you? Where are you?

[neil324]

Sorry you feel depressed.

Indeed it could be worse. Which is why we are watching the trend.

But for my parents in the UK, its going to be a cold hard winter- luckily they have log fires, as they cannot afford heating. For them i fear greatly. For me, im only 35, and have been priced out of the UK housing market for most of my life... for me the only decent future is outside of the UK - an adventure!

It is tragic though Soidog, the world largest western generation - the baby boomers are facing a terrible time if the markets/pensions meltdown even more.

I dont think anyone with sterling is enjoying this, its not like we have an easy country to be poor in!

Anyway, the bright side you are right.. all things must pass, could be worse, we could be Thai's living under a 'mess' with only thai baht in the bank

My immediate family lost all its money and possesions in:

1917

1945

1997

2009?

same old same old. Im still alive!

I have a pathological fear of debt and have to buy everything including houses in cash.

I've been in a "non credit" mode for eight years and it makes total sense to me, it's not about not being able to afford something or an inability to get credit, it's about personal discipline and what makes sense. I have credit cards that I use at times but the debt never remains for more than three weeks. Keep up your so called pathological fears!

I'm 33, and without debt I've managed to build two houses in Issan, buy a 1.7rai plot overlooking Bang Saray, buy farmland in Issan, keep a business going in the UK . . .

I can't understand how people manage to get into such horrific debt?

The UK became the centre of the 'I want everything and I want it now' culture. Made me sick. I can't stand materialism either. Don't get me wrong, I love to make money but for reasons of future security not to ponce round in some silly motor car.

Nice one CM.

Funny enough m8 i had you down as an old fart Mr Parry..........

Yer funny Neil.

How are you? Where are you?

I'm ok, maybe a bit hot. Just giving my liver a rest.

[ArranP]

I go long sterling from this month end onwards, I entered into dollar june last year at 1.96.

In the next 2 to 3 months I may or may not miss out on further strengthening of the dollar, but I think 6 to 12 months from now the dollar will be weaker against the pound than it is now.

Edited December 9, 2008 by ArranP

[MJP]

I go long sterling from this month end onwards, I entered into dollar june last year at 1.96.

I may or may not miss out on further strengthening of the dollar, but I think 6 to 12 months from now the dollar will be weaker against the pound than it is now.

I too am long Sterling.

Not though choice, just stupidity.

Should have gone with the gut and changed up at 67 THB start of August.

Neil,

Be careful out there. Pattaya would not be my choice of destination, mainly because of death threats from the ball-and-chain.

[ArranP]

Listening to Bloomberg today, two different speakers put forward a new theme to me, one of them being Bob Parker of Credit Suisse Asset Management, that is:

As interest rates reach near zero, investors (including banks) will no longer be getting a return on cash, also with bonds giving little return, they will turn back to equities, funding these positions with cheap (close to 0% interest) money!

Correct me if I am wrong, typically as equities rise, the dollar will weaken, as SumNumNa can demonstrate in his charts showing the DJI correlation to the dollar.

[chiang mai]

I go long sterling from this month end onwards, I entered into dollar june last year at 1.96.

In the next 2 to 3 months I may or may not miss out on further strengthening of the dollar, but I think 6 to 12 months from now the dollar will be weaker against the pound than it is now.

Same for me.

[VegasVic]

I go long sterling from this month end onwards, I entered into dollar june last year at 1.96.

In the next 2 to 3 months I may or may not miss out on further strengthening of the dollar, but I think 6 to 12 months from now the dollar will be weaker against the pound than it is now.

Arran, Just curious as to why you would choose this point in time to take a long position in Sterling? Perhaps there is something that I can't see from my vantage point, but no matter how I look at the situation I see the BOE having more rate cuts down the line, unemployment increasing and the real estate crisis in the U.K. getting worse Is there some immenent economic recovery that you expect in the U.K. that no one else can see?

[ArranP]

I go long sterling from this month end onwards, I entered into dollar june last year at 1.96.

In the next 2 to 3 months I may or may not miss out on further strengthening of the dollar, but I think 6 to 12 months from now the dollar will be weaker against the pound than it is now.

Arran, Just curious as to why you would choose this point in time to take a long position in Sterling? Perhaps there is something that I can't see from my vantage point, but no matter how I look at the situation I see the BOE having more rate cuts down the line, unemployment increasing and the real estate crisis in the U.K. getting worse Is there some immenent economic recovery that you expect in the U.K. that no one else can see?

Hi Vic, thanks for your interest in my thinking.. I am no expert, only accumulated views from watching bloomberg, but here goes I lay my cards on the table...

Whilst there maybe some movement in USD/GBP toward dollar strength in the next 2 or 3 months, I think 6 to 12 months from now the dollar will have weakened against the pound. Possible trade points for me are at each month end. I moved into the dollar at 1.96 june 2007. My reasons for moving out of the dollar and into sterling are:

De-leveraging... banks cutting back on lending, forcing investors to liquidate equity/commodity positions and re-patriating money back to the dollar and yen has given rise to the majority of strength observed in the dollar and yen. This de-leveraging story, I think, has run the major part of its course.

Monetary policy... whilst most of the movement in USD/GBP was observed before BOE rate cuts took place, therefore I think attributable to the de-leveraging story noted above. However, some USD/GBP movement has been attributable to rate cuts. The BOE probably has another 1% to 1.5% of cuts ahead in the 1st QTR of 09, this may cause sterling to weaken further, but also the FED will probably cut another .5% to 1% so would possibly offset the affect from BOE cuts a little.

Macro... I think dire for the most part of 09 in both economies... I think negative UK reports will offset negative US reports and visa-versa....

Cash.... people/institions have flocked to cash, with interest rates nearing zero, there will be little to no returns and therefore increased incentive to sell positions in cash and seek returns elsewhere....

Bonds... I am not an expert here, but I think yields are dropping here too, as it seems bond traders are taking a dismal view of things to come.

This leaves equities and commodities.... both of these have come a long way in one direction already, I think investors will start to move positions from cash and bonds (as they offer little return) into equities sometime next year (maybe in qtr1 / qtr2).

- Equities, it seems, tend to be 6 months ahead of the macro.... if the maco were to stabalise/improve toward the end of 09, then equity investment would pick around summer 09.

- As equity rise, so the dollar weakens, and so does the yen. These currencies, due to there low yield, have been used as funding currencies...

Obama... has indicated he will give priority to getting the US economy back on track, and a lesser priority to the US deficit. I think this means he will print money, this would weaken the dollar also...

I do not try, nor can I do, timings of the exact bottom or tops in currency movement.... I can only come part of the way then switch currency to lock in those profits and wait for the reverse. I do not see this switching to be taking place every month, but probably every few years as one currency gains strength against another.

An alternative strategy would be to hold capital in two or three currencies and withdraw livings expenses from the strongest of them.

Edited December 10, 2008 by ArranP

[chiang mai]

I don't know about anyone else but I reckon that a pretty full and complete reply and certainly mirrors the way I feel about things also.