Cyclicals- Lance Lewis has an interesting take on his daily summary.http://www.dailymarketsummary.net/Today.htm
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What's going on with these cyclicals? Basic industries like paper (IP), copper (PD), chemicals (DD), etc, all continue to act very well. The market obviously likes them, but why? Bulls tend to interpret this as evidence of the coming mammoth recovery. I disagree. Now, maybe it's just a bunch of misplaced optimism about a recovery, but to me this is just more evidence that the market is preparing to attack the dollar. A fall in the dollar would be the best thing that could happen to the rest of the world, considering that the world's debts are primarily denominated in dollars. A drop in the dollar would boost economies outside of the US and generate demand for basic materials, helping the US export industry. Obviously, such an event, while it may be good for US exporters and the economies of the rest of the world, is not the best thing for US stocks or the US financial system as a whole. The ironic twist is, however, that in order to begin to take the steps back to a healthy global economy, that's exactly what needs to happen, in my opinion at least. |
