Reply #48: Beating On China Again! (Today's Phenning)

[54anickel]

Speaking of China, I saw somewhere that they and Russia have been penning quite a few deals today.

http://www.kitcocasey.com/displayArticle.php?id=614

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Not much happened overnight, rhetoric wise, except of course if you count Senators Graham and Schumer still harping on the Chinese to allow their currency to flow, right now! I just wish these guys would go home and worry about things that they CAN change! By the way, the renminbi rose to yet another post dollar peg high! My favorite economist, Stephen Roach of Morgan Stanley said... "They are asking for a lot"

You know... The Chinese may seem to move slow on the changes they have promised to make, but come on, they have the Goose and the Golden Egg right now! You wouldn't want the U.S. to mess that up if they had that situation...

The dollar did come back a bit yesterday, sending the euro and other currencies down but not much... The dollar's ebb and flows continues to center around the "thought of the day"... Will it be "inflation is slowing, no need to raise rates more"... Or the one that filtered through the markets yesterday... "the economy is strong, so more rate hikes are coming"... You know me... I don't really care if rates here are going up, that just means the yield curve remains inverted, the housing sector's balloon gets popped, and consumer spending comes to a halt...

What I focus on is the "overall fundamentals" of the country, and whether or not they can support the currency... Here, the U.S. fails miserably, and should show on the dollar eventually...

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Nothing new on the India making their currency fully convertible story from yesterday... I think this development is good news, and if you think about it, India is laying the ground work and developing a blue print for China... India's currency used to be pegged to the dollar too... And then they slowly moved to the current policy, which is now going to be replaced... That all took about 2 1/2 years... China just dropped their peg last July!

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