Buzz and Banter
I am not qualified to make fundamental commentary on the movement of the global currency markets. I am qualified however, to point out there have been 4 instances of greater than 15% declines (using monthly data, provided by Baseline Inc.) in the U.S. Dollar Index since 1989. They are;
Jan 2002 - May 2003 -22%
Dec 1993 - April 1995 -16%
June 1991 - August 1992 -18%
May 1989 - Jan 1991 -20%
My point isn't the weak dollar is good...just that it isn't a new thing, and prior instances of pronounced weakness were not followed by imminent U.S. financial markets demise.
I understand there are other issues here, twin deficits etc...but think about the impact selling 1% of U.S. based holdings would have on the remaining 99% position. That doesn't sound like a good option to me if it were my money.
I constantly come across lately as the bull here and that's ok. The truth of the matter is that I see what "they" see. Add to that the S&P 500 hasn't even moved above the last "lower high" (roughly 1150). The intermediate-term downtrend hasn't even been broken - but simply testing it would represent a 12.5% gain from current levels.
My work continues to suggest a test of that level. Until it does I don't have to debate the secular case because it hasn't yet changed from negative and won't in my view until a move above 1150.
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