Thursday 4 November 2010

FTSE6000 in 2010

That is one new prediction from me on the markets for this year. My original prediction was we would end up at 5750 or so, but with the successful acceptance of more QE in by the US Federal Reserve the markets are only headed one way.

The Hedge funds and their computer algorithms who generate 60% of the US market trades and 30% of the FTSE ones know this, the institutional investors know this too. We could see and extended Santa Rally.

In the long-term this debt is going to get monetised and the US dollar is going to get de-rated from being the World's currency within a few years, if not next year at this rate. In the meantime the mercantilist Countries like China are going to take a hot bath of rapid inflation . 2011 will be a crazier year than 2010 that is for sure.

5 comments:

Anonymous said...

QE...
Look for US$/Euro, and US$/£ swaps, and more covert/overt QE by all parties going onwards.

Race to the bottom, errmm plug hole.

Then more debate in Q3 2011, for another dose.

Edindie said...

"the US dollar is going to get de-rated from being the World's currency within a few years, if not next year at this rate."

Do you really think so??

CityUnslicker said...

Edindie - How can it not, the US are never going to try and reverse QE as that will kill the boom they are trying to engineer.

If they monetise the debt it kills the dollar but also China and the EM's who hold dollar assets.

To avoid meltdown the EM's are going to have to scrap dollar pegs and diversify assets - QE forces this to happen more quickly. Hence the big commodity spike.

Steven_L said...

I wouldn't be surprised if the US do hike rates to reverse the inflation/boom in a few years.

Volcker did in 1980 after all. It might hurt the US economy to do so, but it'll hurt everyone else more and help them retain their dominance over the world.

Daedalus said...

Does this mean that my son leaves his with profits bonds with Standard Life for a while longer, or does he get out when they hit anniversary date just before Christmas?