Diamonds and Dogs
The Dollar MirageThe Dollar Mirage
If you watch too much CNBC, not only is there a chance of your mind going soft, but you may also get mixed signals, a surprising amount of the time. For the past two years, a popular (and crowded) trade has been to be short the US dollar as the Fed continues to flood the economy with dollars and the deficit takes on record proportions. As reported by CNBC, the dollar appears to be strengthening versus the Euro and the Japanese Yen, which is true. But those two currencies are very weak themselves as the European economies struggle more than ours and the Yen suffers yet another year of slow growth. Against all other major currencies, the dollar is still trending lower and that will be important for future investments. Keep an eye on the weak dollar as eventually we will experience higher interest rates and higher commodity prices, as the US government tries to grow and inflate our way out of the "great recession". Speaking of commodities, the oil slick in the Gulf of Mexico continued its move towards the coastline and is now a state of emergency officially. Oil prices surged on the news as potential supply shortages could follow the black trail as it floats into shipping lanes. It didn't slow stock buyers though, as the S&P experienced its best session in two months or so.