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Stewart:
I understand your comments about complexity. There's also the question of how to
value currency flows and in what country's eyes. A good index is a good start.
We might find out later that it might be more effective if it is currency
adjusted...or not.
Best,
Tim Morge
Stewart Taylor wrote:
>
> >Second, I agree with your categories in general, Stewart. I would also
> like to
> >see some distinction in the prices of commodities, however. For example, corn
> >and wheat can be tilled under in the US if they stay at today's prices.
> There's
> >no market here, and many needy nations cannot afford them because their home
> >currency prices US grains out of their reach.
>
> I spent several months working on adjusting charts for currency changes and
> flows, but came to the conclusion that it was just too damn much
> information for me to keep up with and to evaluate. I have to admit that I
> have taken to using the CRB proxy because I mostly trade U.S. bonds and
> stick to the domestic exchanges.
>
> >I also would not underestimate the effect of certain flows like oil...Again,
> >these flows are more readable when they are re-calculated on a currency
> basis.
> >For example, oil rates are not particulary cheap to those countries that have
> >seen their currencies plummet on the Asian crisis. Maybe commodities
> should be
> >calcualted in a basket of currencies and the commodity groupl split to
> reflect
> >industrial commodities[oil, metals, building materials] and foodstuffs[grains
> >and others]?
>
> I couldn't agree more, but again, is extra work worth the result? Are we
> trying to build a model or are we trying to get a quick fix on the state of
> the world. Not saying that your way is wrong, I don't know. I do know
> that I like quick and simple.
> At the least, averaging them all together this way would be interesting to
> watch (as long as the process were automated).
>
>
>
> Stewart Taylor
> Taylor Fixed Income Outlook
> Voice: 501-219-9774
> Fax: 501-228-0963
> E-Mail: staylor@xxxxxxx
> Web Site: http://www.cei.net/~staylor/
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