Minyan Mailbag - '05 Outlook
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.
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?
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?
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.
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