Strong US Buck - Bad For The Economy_


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Strong US Buck - Bad For The Economy_

  1. 1. Strong US Buck - Bad For The Economy?Since late the month of january , the US stock market has been in a decline. While the longer term,positive pattern of the market remains intact, we are around the corner a "line in the sand" momentwith regard to market watchers.The market had been inside a strong uptrend because March of last year , but has recently damagedthat trend. This may simply be due to profit taking as investors look to reallocate their portfolios, orthis may be something worse. While the S&p 500 index is within a very textbook as well as orderlydecline, market watchers will be exploring the 200 day moving average to get a longer termperspective of the markets general direction. Bullish investors like to see a market trade above theactual 200 day moving average. Violating the actual moving average is a great indicator that themarket trend has changed.As the market diminishes to meet up with the present 200 day moving average, traders is going to beclosely watching to see if buyers return to the market. If buyers dont come back to the marketplace atthis level, it is a good indication that the majority of market participants feel that some thing hasfundamentally changed (e.g., greater chance of a double dip recession, higher than expected taxraises , poor corporate earnings , etc.).This raises the question: exactly what has changed in the us economy? Answer: the actual comebackof the us dollar. While most politicians like to brag about having a strong buck policy in place, it isntthat excellent during a weak economy. A strong dollar makes us products more expensive overseas.Since the market meltdown in 2008, the united states dollar has been really weak when comparedwith its peers, such as the euro. This has helped strengthen the US economy by 50 percent ways.First, the products are cheaper and much more competitive overseas. Second ,our products are lessexpensive and more competitive home. The US economy is basically based on consumers. The moreconsumers buy us products, the better its for our economy.Historically, the US has always been the actual safest currency on the planet. Last year, manycountries sold the US buck and moved their cash to the Euro or into Asian foreign currencies.However, the recent news that a holiday in greece , a Euro country , may be the next "Iceland"(insolvent) has caused international currency investors to run back to the US buck - thus resulting inthe US dollar in order to strengthen.How is the Rothe Financial group using our absolute Return Strategy to take advantage of thesemarket indicators ? Right now, the positively managed portion of the portfolio has been moved tocash as we wait around to see if the 200 day moving typical is violated. If the moving average isactually violated, we will after that begin to add inverse investment positions which provide us aunique opportunity to profit inside a declining market. Well continue to follow these trends closely andupdate our strategy when needed to maximize our clients profits regardless of market conditions.Costa Rica marketing