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I am saying that price action in equity markets is due to perceptions about currency manipulation not perceptions about economic fundamentals.

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could you define what you mean by currency manipulation and provide evidence for your price action claim?

thanks,
Barron

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i think he means rate cuts, but perhaps more including things like the presidential financial working group.



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now i don't want to wake the borodog beast here but i do think that calling rate cuts "currency manipulation" is bad taste.

"currency manipulation" is what china is doing to the yuan. the entire purpose of their open market operations is SOLELY to devalue their currency in order to expand export growth.

in the US, the fed's aim is not SOLELY to devalue the US dollar. it is to increase consumptive demand and reduce borrowing costs and smooth out the money markets. the effect on the currency is ancillary and certainly not the main thrust of the policy.

in fact, i'd say the currency situation is the lever that keeps the fed in check right now since ben can't lower rates too much otherwise inflationary pressures would simply be too much.

to call the fed's rate cuts "currency manipulation" imo is just poor taste. the reason is that "currency manipulation" has a very specific meaning too it which is not the case at this point.

in the 1980s while the USD was moving too high (and then too low) there was definite "currency manipulation" with the stated goal of having the dollar reach a certain point. there is no such goal here and the purpose of the fed's actions is clearly to spur the US economy, not reduce the value of the dollar.

as i've mentioned before, a 50% increase in exports means less to GDP growth than a 10% increase in domestic consumption.

Barron