Sell US stocks and buy the dollar (page 3 of 3)

As a result, I think that to buy some Asian currencies (but not the Hong Kong dollar) does make sense.

Personally, I like - as mentioned on previous occasions - the Singapore dollar, but now I would also buy the Malaysian Ringgit, since like the RMB it is also pegged to the US dollar. Compared to the Euro, the Singapore dollar is a tremendous bargain and from the charts we can see that a breakdown of the US dollar against the Singapore dollar is a distinct possibility.

Bearish on US bonds

Lastly, we should mention that US bonds are unlikely to provide satisfactory returns in the years ahead. Without or with less support by Asian central banks, US bond prices are likely to decline and if the US dollar remains structurally weak inflation is likely to accelerate. Therefore, we feel the time has come to liquidate US bonds.

In sum, and for the short term only, I would now get out of equities and buy the US dollar. If for diversification purpose or in order to join the US dollar selling panic another currency than the dollar is absolutely necessary, then I would buy gold, silver and the Singapore dollar for the reasons outlined above.

For the longer term, we shall need to assess the extent of the US stock market correction, as we may already be at or very close to a major top. The same may apply to the over-bought Euro compared to the US dollar. As for US bonds, the likelihood of US interest rates moving up is high and, therefore, the reward of holding dollar bonds does not appear favorable compared to the risk.