Wednesday, December 15, 2004


Yep, it is actually good news for the dollar to fall again; something has to give. Bond yields must go up or the US economy must slow or the dollar must decline. Given the choice of the three, most Americans would say let the dollar fall.

Those who own bonds, stocks or real estate will likely benefit from the falling dollar. Those wanting an American job should find one. American business is gaining an advantage in the world market as a result of the declining dollar. Those who are thinking about traveling to Europe should take some extra cash!

The Fed raised short rates yesterday from 2.0% to 2.25%. Perhaps the fed has finally posted positive real rate for the first time in two years. We will only know as data come out in the future because the inflation rate is a moving target.

The target is moving partly because of the fiscal and monetary stimulus that the government has supplied for more than two years. The economy is currently like a train that has gotten a full head of steam. It is moving down the track with a lot of momentum and Greenspan is starting to tap the brakes a little but Bush is throwing more goal on the fire.

This train is not going to fast but a lot of Americans have been afraid to get on board. Money and earnings are plentiful. Companies are raising dividends and buying back stock. Although there are many fast growing expensive stocks around, on balance stocks are cheap and headed higher. ALL ABOARD! If you need some assistance getting aboard let me know.