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March 18, 2009
Dollar Weakness is Bullish
My friend and fellow money manager, Scott Rothbort, noted on SeekingAlpha.com that euro strength is bullish. I think he is right. The euro is over $1.21 today, the highest since mid-February. The euro is also at a multi-month high vs. the yen. A chart of the euro/USD looks an awful lot like the S&P 500 over that time frame.
Scott mentions the beneficial impact of currency translation but I think just as important, maybe more important is that euro strength (dollar and yen weakness) is a sign of lessening risk aversion which is in turn a sign of improved confidence in the global economic outlook.
And it is not just the euro. Emerging market currencies have rallied as well. The Mexican Peso has rallied 10% in the last two weeks and is now down just 2% on the year. Even Eastern European currencies have rallied led by more stable nations like the Czech Republic. Dare I note that even Ukraine's currency has rallied over 10% and is now down just 4% this year.
I see currency movements as investor sentiment on the global economic outlook. Right now currencies are improving which is a positive for stocks.
Position: No positions mentioned but client holdings, including my personal accounts, are positively leveraged to euro and emerging market currency strength including CETV and NIHD.
Posted by Steve Birenberg at March 18, 2009 09:34 AM in Stock Market
1 CETV IS SOARING WITH THE FED'S ACTIONS AND WITH THE COLLAPSE OF THE DOLLAR.IS THIS ACTION SUSAINABLE OR IS IT JUST REFLECTIVE OF A STRONG/TEMPORARY BEAR MARKET RALLY?
2.IS THE RISE IN CETV JUST DUE TO MACRO ISSUES I.E THE CURRENCY AND THE FED'S ACTIONS-OR DOES THIS SUDDEN RISE IN CETV'S STOCK SUGGEST ANY ANTICIPATED ACTIONS OF CETV'S BOARD WITH REGARD TO BULGARIA AND THE UKRAINE? DO YOU THINK CETV 'S STOCK HAS STABILIZED AT THIS TIME AND AGAIN HAS BECOME A BUY OR IS IT STILL QUITE FRAGILE,VOLATILE SECONDARY TO OUTSIDE FORCES?