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Minyan Mailbag - '05 Outlook

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Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next discussion with that very intent.

John,

As I was reading various financial publications this past weekend that help me form my 2005 outlook, I found a very interesting theme emerge. It was the disagreement over the SHAPE OF THE YIELD CURVE. The more bearish outlooks look for a much flatter yield curve and the more bullish outlooks look for a steeper yield curve. That is interesting to me as the yield curve has recently become my single biggest indicator of how things will play out.

f you had to pick one indicator in 2005, what indicator would you use to assess the market/economy?

Thanks,
Minyan Mark


P.S. Is the strength in the Yen indicating a possible IMMINENT revaluation of the Chinese YUAN?

P.P.S How leveraged is Asia (AKA Japan/China) to the U.S. consumer? Could Asian currencies decline versus the dollar if the U.S. consumer pulls back?

Mark,

I would focus my attention on the dollar, especially the dollar yen. A weakening dollar will dictate the yield curve and affect asset markets in more substantial ways in 2005: whereas a weakening dollar lifted asset prices in 2004, such could easily have the opposite effect in 2005.

Regards,
Prof. Succo

No positions in stocks mentioned.

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