By Money Matters Editors
Some investors, particularly those new to investing in stocks, are bewildered by the U.S. stock market’s ability to rise, even while the U.S. economy is still in recession, with high unemployment.
The reason has to do with how institutional investors – the players who move the market - operate. Institutional investors (IIs) are always looking ahead, or ‘down the field,’ to borrow a U.S. football analogy.
Typically, IIs are reviewing currently data, compare it to forecasts, then they make an assessment of the condition they think the economy will be 6-9 months into the future. If they believe economic conditions will improve, and corporate revenue and earnings will rise, they bid stocks up, and the market rises; worse, they sell stocks, and the market declines.
Showing posts with label dollar euro yen budget deficit currencies Russia Brazil Japan India China Saudi Arabia British Pound institutional investors trade deficit Swiss franc recession expansion. Show all posts
Showing posts with label dollar euro yen budget deficit currencies Russia Brazil Japan India China Saudi Arabia British Pound institutional investors trade deficit Swiss franc recession expansion. Show all posts
Friday, September 11, 2009
Tuesday, September 1, 2009
Where is the U.S. dollar headed from here?
By Money Matters Editors
Where’s the U.S. dollar headed from here? Well, if you’re in the camp that argues that both U.S. monetary and fiscal stimulus guarantee rising U.S. inflation, the dollar will likely weaken in the immediate quarters ahead, and probably for longer.
If you’re in the camp that argues that given asset destruction, and massive job lay-offs, price power is non-existent, the dollar will hold its own against the world’s other major currencies.
The dollar weakened about one-half cent Tuesday to $1.4319 and $1.6232 versus the euro and British pound, respectively. The dollar was virtually unchanged versus Japan’s yen at 93.27 yen.
Where’s the U.S. dollar headed from here? Well, if you’re in the camp that argues that both U.S. monetary and fiscal stimulus guarantee rising U.S. inflation, the dollar will likely weaken in the immediate quarters ahead, and probably for longer.
If you’re in the camp that argues that given asset destruction, and massive job lay-offs, price power is non-existent, the dollar will hold its own against the world’s other major currencies.
The dollar weakened about one-half cent Tuesday to $1.4319 and $1.6232 versus the euro and British pound, respectively. The dollar was virtually unchanged versus Japan’s yen at 93.27 yen.
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