Dollar Bulls Making One Last Stand...

... On the back of one strong existing home sales number? Surely, you must be joking... The dollar needs a correction -- a downward correction. Why do interest rate differentials matter when, clearly, the greenback has some tremendous structural issues... It beats me. In any case, today wasn't a good day for eurodollar (FX) longs. I wouldn't despair yet though. I think we see 1.26 before the end of next quarter. I don't think it matters much where the Fed goes, as long as the ECB follows.

Equities? If you are long, you should be selling on any spikes up. If you are flat, wait on the sidelines like me. If you are short, you are wasting your time and money for now, though I do expect you to be right eventually... again before the end of next quarter. Options offer a better risk reward than outright cash positions... what with volatility being cheap as chips. It may well be a much smarter way of playing the inevitable correction, rather than sitting on the edge, waiting for the stop-loss call from your glib broker. There's just too much hot money chasing returns in this environment. I hope Bernanke recognizes that and dries up this really annoying, stale global money-liquidity pool in which we have been sloshing around ever since 9/11 practically. He shouldn't wait for the stench from that pool to overpower the world's financial system. Liquidity-driven growth is no growth at all... It's like pumping heavy iron on steroids, when your muscle just isn't ready for the weight. Ben, please, let's not wait for the "injury" to occur before you administer "the medicine". Act now!