Thursday, November 12, 2009


Many keep arguing that the main reason for the appreciation equities is the falling dollar. How long can that continue? Treasury Secretary Geithner said that we are committed to a strong dollar. Can it be achieved? We all know that we need the dollar to be strong but can it recover?

The futures are higher this morning on the back of the statement that the Euro Zone is officially out of the recession. Due to exports, they grew in the 3rd quarter. So is it all over? Are we back in the bull market for good? First, I don't put much stock in these numbers because of the massive worldwide stimulus. If it was this easy to come out of a recession, why don't we just print the heck out of money all of the time?

Lets take a look at what is driving the currencies. The dollar is falling because of the debt and the very low interest rates in the U.S. So if other countries grow faster and raise rates, will the dollar continue to fall? It could. So we just need to get Ben Bernanke to go ahead and raise rates now? Can we or would that send the economy back into a tailspin and prompt more stimulus and increase the deficit?

My simple point is this---I don't think that we can see the dollar's fall as good for much longer. The steps necessary to strengthen the dollar will bring more pain for our economy. SO ALL OF THE CURRENT EUPHORIA IS NOT WARRANTED AND WE WILL SEE SOME DOWNWARD PRESSURE ON STOCKS.

I have been wrong thus far, but still believe a retest of the March 2009 lows is not out of the question.
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