Even Kudlow is making the big mistake ofadvocating a strong dollar. Seems republicans , dumbocrats, and everyone else keeps talking about 'propping the dollar' Gotta 'raise the dollar' 'The dollar is the signs of a strong economy' 'Dollar is a sign of confidence' blah blah blah The dollar could drop to 60 and it would be fine. The euro is in a buble and cheap dollar benefits exporters. By trying to infglate the dollar it will cause stocks to fall due to decreasing revenues and profits. A cheap dollar DOESNT signal a lack of confidence. A cheap dollar is good. PURCHASING POWER doesn't fall when the dolalr falls. So many people are mislead into believing that somehow if the dollar falls that they can't buy as much. True, you can't buy as much inEurope, but who gives **** but in America the purchasing power only decreases in accordance to INFLATION.
A large portion of USA goods are from outside the USA. True, the yaun is pegged to the USA dollar and this is artificially supporting your you consumer buying power. But this wont last forever. Other commodities like OIL you are paying more for, those that hold your assets of govt debt and foreign currency reserves are holding the wealth. So If you are a worth $1,000,000 in Iowa, thats only $500,000 pounds in London. Foreigners can buy your place up, and own you !!
I agree with your relentless bullish outlook for the stockmarket, but I have two questions for you regarding a weak dollar: 1. The 90s were largely defined by a strong dollar, and the market did well. Lots of reasons why the market did well, but one of which could have been foreign money investing in the U.S. markets because their investments also benefited from the appreciation of the dollar against their home currencies. What happens now to those foreign investors now that they see any stock market gains destroyed by the depreciating dollar? 2. The vast majority of consumer goods are produced in foreign countries (with China being the largest source). The pressure now with the depreciating dollar is massive for the Chinese to let their currency rise against the dollar (another question is what they'll do with all that U.S. debt that they hold). The Chinese keep trying to tap down their massive growth rate. Increasing the value of the yuan, will help achieve this. So there is now more pressure than ever (both within China and from outside of China) for the yuan to increase. What wll happen then? More inflation pressure in the U.S. The massive increase in imported Chinese goods over the past 10 years has been the primary factor in keeping consumer inflation low. This factor is going away.
The same idiots who proclaim it's "global"economy and its great for the US are the same idiots who laugh at you when you denominate their gains in anything else but USD. If you're gonna think globally, then your gains as a country have to be thought of globally. It's a global economy for everyone else and everyone seems to be kicking US butt. And its not a low dollar that is helping the US but a FALLING dollar. It has to keep FALLING for the US to see any benefits. It can't fall forever.
"By trying to inflate the dollar it will cause stocks to fall due to decreasing revenues and profits. A cheap dollar is good. PURCHASING POWER doesn't fall when the dolalr falls. ...in America the purchasing power only decreases in accordance to INFLATION." You sir, is an idiot! And there is no inflation, right.
it's funny that people like kudlow and rubin are starting to complain about the dollar at this particular point. why now? it makes me think the bull mkt, economy etc must finally be tapping out.. and these guys are frustrated to be losing wealth at both ends finally. the price of gold finally passed the value of the russell - look at a spread. it's just like when the 03 bull mkt started as the DXY crossed below 100. the market is diverging from everything else now interesting that terder chooses a 60 mark on the DXY as his limit... the 50% deval from the 120 high mark