Friday closed up perhaps on anticipation that the bailout package would go through, and make everyone feel warm and fuzzy inside. We don’t have an agreed upon package and some interesting things are occurring in the market:
1) The Dollar is rallying
2) US markets are down severely
3) World markets are down
4) Bonds are up, yields are down
5) Commodities except Gold and Silver are down
Is this the beginning of the end? The Fed pumped another $600bn + into the markets, which is a signal that the dollar will be inflated rapidly. We don’t get to see the effects immediately, but one would presume that with that much money floating around the dollar would be falling, gold and silver rallying, commodities rallying, and even the markets would be rallying.
CONCERN:
Everyone is watching and waiting to hear about the bailout news. If it passes what will happen? Some are saying that the markets are already to far gone, and the downturn is spreading into Europe.
BAFFLED:
The dollar is gaining strength, which is ironic because of the amount of liquidity the Fed is creating. Long-Term this can’t mean anything good for the dollar. Short-term there has to be massive buying of the dollar to keep it from falling. Imagine if the dollar fell at the same time the market fell… I’d want my shot gun at my doorstep just in case.
Beyond this I don’t have much to say at the moment. There is an amazing amount of uncertainty and fear floating around that if it all comes crashing down at once… If this bill passes, which is vehemently opposed by much of the public, we will probably see a little rally. I figured that when I woke up the market would be in full bear market correction, however prior to bed the futures markets were indicating the contrary.
WILL SOMEONE PLEASE TELL ME WHY THEY THINK THE DOLLAR IS RALLYING?
Sometimes the obvious isn’t so obvious:
The dollar… other central banks around the world are also inflating their currencies. How long this will continue I have no idea, but if everyone inflates in tandem presumably nothing changes. Well, until there is a complete loss of confidence in once currency or another. Then… <Fill in the blank>
I don't think it was that the dollar was rallying yesterday (and again today) but rather than other world currencies were falling because of the fear that our problems are spreading around the world.
I don't think it was that the dollar was rallying yesterday (and again today) but rather than other world currencies were falling because of the fear that our problems are spreading around the world.