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Brother, can you spare a dime (or a dollar)?

Author: Bob Lang (info)
Website: http://trade-mentor.com
Posted: November 27th, 2006 at 2:53 pm EST
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Markets are giving it back today a certainly higher volume than Friday (that was an abbreviated session).  Alot of chatter for the reason behind the selling ranging from a weak dollar, to oil supply fears, to higher gold (implying higher inflation) and other ideas,  Yada yada yada!  We should understand that there are any NUMBER of reasons for selling…profit-taking, diversification and stop losses just to name a few.  But should also understand there is only ONE reason to buy. 

We’ve seen the dollar plunge recently, with gold pulling up the slack.  What’s happening here?  It appears to me that foreigners may be dumping US assets, but is it true?  Could we be seeing such a massive exodus in one day?  For sure the markets have not been pointing this way for some time.  Remember, a weak dollar can be inflationary, but will also steer growth upwards if the consumer is somewhat weak in the knees.  Interest rate futures are pointing to a sluggish economy with rate cuts on the way, possibly as early as the first quarter of 2007 

A weaker dollar is good for exports, hence the trade deficit and GDP.  We’ll see some important economic numbers in the coming days.  In fact, we’ll likely see economists start to revise their estimates of growth for the economy for Q4.  Slowing data will see downward revisions.  Stay tuned! 

 

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