I read an iteresting article today at Wall Street Pit. I don’t claim to understand the stock market. I usually steer clear of overly technical sounding wall street chatter, but this particular article mentioned something that caught my eye. It seems a weak dollar is actually seen by some on Wall Street as a good thing. This should serve as a warning to average folks who actually work for a living in the productive portion of the economy.
It is still important to remember that the stock market participants that can move markets (institutional traders) are still addicted to quantitative easing or easy monetary policy. Plain and simple, the people that move markets want more money creation to devalue the U.S. Dollar. When the dollar gets diluted it causes inflation and the stock markets around the world will trade higher. That will not happen when the U.S. Dollar Index trades higher, equities and commodities will deflate and trade lower.
In the 1990′s, the major stock indexes would rally when the U.S. Dollar Index was strong. Unfortunately, ever since the NASDAQ Composite bubble popped in the 2000 the only way to get the major stock indexes higher has been to drop the U.S. Dollar Index. Hopefully, one day a stronger dollar will be viewed as a positive to the institutional traders. After all, when the dollar is strong all the goods that people use everyday becomes cheaper.