Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (477)	7/8/2001 12:07:43 PM
From: craig crawford	Respond to of 1643

July 8, 2001 Market Watch: Robust Dollar May Be Too Mighty for Its Own Good nytimes.com By GRETCHEN MORGENSON The strong dollar is burning a hole in the stock market's pocket. And it's likely to get bigger in the coming months. Hitting a high for 2001 last Thursday, the trade-weighted United States dollar index is up 9.5 percent. The free fall in stock prices on Friday indicates that investors may finally be focusing on how much trouble the soaring currency means for corporate profits as well as the economy. The Dow Jones industrials lost 2.4 percent for the week, while the Nasdaq slumped 7.2 percent. The dollar's impressive showing is all the more amazing as it has come despite aggressive policy moves by the Federal Reserve Board. The Fed has cut interest rates significantly this year and has also pumped up the supply of money in the financial system. Normally, such actions make the dollar less attractive to investors and keep it in check against other currencies. ........................................................................................................................ Mr. Paulsen calls this the abyss scenario. Whatever its name, it is playing havoc with the Fed's attempts to revitalize the economy. The year-over- year change in United States exports came in at a negative 1.2 percent in April, compared with a peak growth rate of 15.3 percent in June 2000. And the strong dollar is keeping commodity prices in the cellar, putting the manufacturing sector in a vise. ........................................................................................................................ Prices of some stocks already reflect the bad news relating to the dollar, according to Mr. Paulsen. These include consumer staples and health care companies with big overseas markets — Gillette, Coca-Cola and Merck are three. But stocks of automakers and companies in the basic materials sector are vulnerable if the strong dollar pushes a domestic economic recovery into 2002.