John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: MulhollandDrive who wrote (4139)	6/25/2001 12:10:31 PM
From: Hawkmoon	of 33421

Do you have any insight about why this would be? Rates are still too high to spur economic growth and make bonds and money market returns less attractive than growth potential in equities. Edit: One thing I've been noticing is how the dollar climbs when stocks decline, which suggests that spill over in IRA/401Ks, and brokerage accounts into money markets (a relative recent phoenomena), apply upward pressure on the USD. That, in combination with a flight to quality in the USD vis a vis foreign currencies, who's economies are seriously threatened by declining export revenues from the US (declining trade deficit), and facing Stagflation threats as energy costs increase due to the arbitrage created by oil being denominated in USD. Also, the fact that there is a general shortage of US Treasuries means that less money can move yields lower, and thus reap more profit from bond prices. This is in stark contrast to competing economies where deficit spending seems to increase the quantity of bonds denominated in their respective currencies. And also the expectation that economic recovery will occur in the US first, to be followed by foreign markets. That's my take, FWIW. Hawk

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