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Boris Chikvashvili

Boris Chikvashvili

Boris Chikvashvili was supposed to be a theoretical physicist (Russia+Jerusalem Hebrew University, MS Physics, with distinction, toyed with QUARKS). Somewhere on the road to PHD…

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Can't Put Humpty Dumpty BRICs Together Again

Dear Reader, as the year end of 2015 draws close , I would like to remind you , that FOREX market is the largest and most important market. I have humbly stated in the past that if one can predict currency movements all other financial / economic variables are much easier to predict. So, let us see how well have we done in this category.


Currencies

In 2013 I published an article http://www.safehaven.com/article/26863/brics-are-falling-india-general-market-survey. It has discussed the Dollar In general and BRIC currencies in particular with a further example of INR( Indian Rupee). As can be ascertained we were pretty gloomy on the prospects of BRIC currencies and pretty bullish on Dollar in general.

Of course now the question is where do we go from here? It appears to us that the carnage of BRIC currencies and general trend higher in Dollar is not complete. It is very, very likely to have deserved respite in / after January 2016, but these trends will come back, as Dollar did not yet give us a final sign of the $ bull ending. In our opinion, Dollar Bull Is not likely to end till 2017, at least, and could last into 2018 just as easily. Below , please see current state of BRIC currencies in graph. As you can see the BRIC ( Brazilian Real, Russian Ruble, Indian Rupee and Chinese Yuan ) have not done well for last 4 years or longer.The only one currency that survived the carnage , is USD.CNY and that too , only up to the point, when its inclusion into the SDR(Special Drawing Rights) was discussed. At / After that decision In November of 2015 CHINA feels free to depreciate the YUAN as it wishes.

 USD versus BRL, RUB, INR and CNY Charts
Larger Image


Stocks

We were not particularly bullish towards the Stocks Market last time around, but we thought it could meander due to the intervening short term cycle strength that would keep the market elevated for a while. We believe this has happened to a large extent and now the more ( long , intermediate and short ) cycles are conspiring to push the market lower into 2016( maybe as early as January). The only way we could change our outlook ( even for a short term) would be if SPX closes above May highs.

 

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