Chinese threat of not investing in dollar after Democrats took control of Senate and House can cause stock market turmoil
Fred Day
Nov. 10, 2006

It has started with the Dollar. The Dollar is at its two month low. The dollar fell to its lowest in more than two months against the euro after People's Bank of China Governor Zhou Xiaochuan said the country will keep diversifying its foreign-exchange reserves away from the U.S. currency.

The effect will soon spill over into the US Treasury market. If the long bond rates start rising beyond the 5.25% rate in ten year note, it will a serious trouble for the stock market. The long term inflation range will far surpass the allowable threshold set by the Fed. The resultant interest rate adjustment can cause stocks to do down sharply.

Chinese threat of not investing in dollar after Democrats took control of Senate and House can cause stock market turmoil
Fred Day
It has started with the Dollar. The effect will soon spill over into the US Treasury market. The resultant interest rate adjustment can cause stocks to do down sharply.
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The worldwide stock markets are ready for a massive correction. Most likely it has topped out and entered a multi-decade bear market. The apparent stagflation has changed into slow but steady deflation.
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Worldwide debt driven stagflation - U.K. economy grew at its fastest pace in two years last quarter as consumers racked up debt
Fred Day
Policy makers led by Governor Mervyn King lifted the repurchase rate a quarter-point to 5 percent in UK to control the infation from borrowed money.
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U.S. trade deficit narrowed to $64.3 billion on lower oil price and higher exports – bullish for dollar and bearish for bonds and gold
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The dollar can stabilize and then move up. Gold will continue to drift lower slowly. Stocks will now have the hard time.
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Gold had its best days – the fiscally responsible US Senate and Congress will bring the correction
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The market internals, technical patterns and analytics was showing deep trouble in the gold, oil and stock markets. Now the fundamentals are also in place.
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Landslide win by Democrats will bring stock market in line with internals of the economy – 40% correction?
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The disconnect is so deep that the stock market can correct as much as 40% over the next two years.
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