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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: J.T. who wrote (11654)	4/19/2002 10:02:14 AM
From: yard_man	Respond to of 19219

I've already said this, but I think over very short time-frames you really can't infer anything (whether USD => stock prices or stock prices => USD level) -- just too many other things to control for. OTOH two things seem inescapable 1) Any quick drop in the USD from here would precipitate a significant marginal change in the foreign flows. These foreign flows are large with respect to historical norms and absolutely necessary to support both our debt and equity markets at current levels. Just because people have been talking about this for years does not mean the adjustment will NEVER happen. 2) A lower dollar would be a benefit in the longer run for corps whose primary costs are in USD -- and it is probably necessary for the beginning of a sustained recovery. But a significantly lower dollar now would increase price pressures and borrowing costs at a time when both effects could hardly be stood, i.e. given our very lukewarm "recovery" and such high debt levels. I put "recovery" in quotes, because I believe it is simply a statistical hope at this point -- the increase in GDP we've seen was all government spending. MNC are large enough to hedge exposure in multiple ways: First, they have offshore production of goods -- diversity ... Second, they are large enough to hedge currency risks in the financial markets through forward sales. The companies that need a lower dollar are mfrs with facilities in the US.