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 : US Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (45)	5/7/2007 9:32:49 PM
From: gpowell	Read Replies (1) \| Respond to of 97

I'm not worried about the US dollar, its value vis-a-vis other currencies is a residual, meaning better to think about domestic concerns such as employment, productivity, and capital expenditure. As far as import prices and exchange rates - it's surprising to many - but prices take a long time to adjust to exchange rates. Upwards of 4/5 years for the full effect - meaning by the time they have fully adjusted exchange rates have changed again. This price phenomenon shouldn’t be all that surprising though as most firms choose to price to market. Consequently, don’t look for import prices to suddenly rise just because the dollar has fallen. And when they don’t, don’t get bagged into thinking this indicates manipulation with the usual attendant blow out period. I should add that the only thing the US is "over consuming" is the world's savings. Domestic savings have mostly going into non-equity "investments" (a lot in real estate obviously) - not consumption goods - indicating individuals are mostly planning for future consumption. The danger here, and it isn’t a very large concern, is that asset markets just aren't very liquid; meaning if everyone heads for the exit at once, consumers may find that they will have to alter their plans. The “deflationist” crowd is counting on that, with an attendant meltdown in credit markets.