Strong Stock Market & Weak Dollar: What Does It Mean?
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Ah, BB, (aka grasshopper)...
A lower dollar makes high-quality American goods more competitive in international markets. Consumers abroad will choose its products over the domestic competition.
As more foreign investors place their money in U.S. equities, they are required to buy U.S. dollars to purchase American stocks, causing the indexes to increase in value.
The critical factor is the makeup of your personal portfolio. If your choices are diversified, your money will be protected from the gyrations of the currency exchange.
The same is true for companies. One of my employers would hedge currencies so that a currency fluctuation as you have noticed between two countries does not significantly impact corporate operational profits over a long term contract.
Understood?
A lower dollar makes high-quality American goods more competitive in international markets. Consumers abroad will choose its products over the domestic competition.
As more foreign investors place their money in U.S. equities, they are required to buy U.S. dollars to purchase American stocks, causing the indexes to increase in value.
The critical factor is the makeup of your personal portfolio. If your choices are diversified, your money will be protected from the gyrations of the currency exchange.
The same is true for companies. One of my employers would hedge currencies so that a currency fluctuation as you have noticed between two countries does not significantly impact corporate operational profits over a long term contract.
Understood?
Guess I gotta spell it out.
A weak dollar can make American goods more affordable to international buyers, but it makes imported goods more expensive, which raises prices on everyday items. This added cost pressure can push overall inflation higher - making it harder for the Fed to lower interest rates
Remind me, who was is that said? "it's the economy, stupid"
Edited 1 time(s). Last edit at 07/02/2025 10:55PM by BarefootBliss.
A weak dollar can make American goods more affordable to international buyers, but it makes imported goods more expensive, which raises prices on everyday items. This added cost pressure can push overall inflation higher - making it harder for the Fed to lower interest rates
Remind me, who was is that said? "it's the economy, stupid"
Edited 1 time(s). Last edit at 07/02/2025 10:55PM by BarefootBliss.
So what's your point? The dollar moves higher and lower against other currencies? Yep. It does that.
Are you telling us that maybe other stock markets are doing better than the US at about 6.3% YTD? Yep. The European stock markets are gaining about 13% YTD. Are you going to bet your life savings on the European stock markets? Good luck!
I wouldn't bet on these short term trends. But you do you.
Inflation will be moved "significantly" higher from the dollar just like inflation moved "significantly" higher from tariffs. It didn't.
Oh, and while I know that there are some who want interest rates lower. Who wouldn't? The fact is interest rates are near the long term average.
If I were to bet on stock markets, I'd bet that the European stock market continues to outperform the US until the end of 2025 aside from any black swan event like the war expanding into Poland. Then, all bets are off.
If I were to bet on inflation and interest rates, I'd bet on both staying about the same through 2025. Maybe slightly lower, but not by much. (But I'm not making any changes to our investments and most other people won't either.)
Significant change, "like the economy stupid", won't happen until the "Big, Beautiful Bill" is passed and implemented. By then, you've moved to another country like you said, right?
Are you telling us that maybe other stock markets are doing better than the US at about 6.3% YTD? Yep. The European stock markets are gaining about 13% YTD. Are you going to bet your life savings on the European stock markets? Good luck!
I wouldn't bet on these short term trends. But you do you.
Inflation will be moved "significantly" higher from the dollar just like inflation moved "significantly" higher from tariffs. It didn't.
Oh, and while I know that there are some who want interest rates lower. Who wouldn't? The fact is interest rates are near the long term average.
If I were to bet on stock markets, I'd bet that the European stock market continues to outperform the US until the end of 2025 aside from any black swan event like the war expanding into Poland. Then, all bets are off.
If I were to bet on inflation and interest rates, I'd bet on both staying about the same through 2025. Maybe slightly lower, but not by much. (But I'm not making any changes to our investments and most other people won't either.)
Significant change, "like the economy stupid", won't happen until the "Big, Beautiful Bill" is passed and implemented. By then, you've moved to another country like you said, right?
Here's a better headline worth noting: "The S&P 500 just flashed a highly bullish “Golden Cross” technical signal"
Just this week, the S&P 500’s shorter-dated 50-day moving average crossed above its longer-term 200-day moving average for a Golden Cross signal.
On the Golden Cross signal, Jeff DeGraaf of Renaissance Macro wrote in a note to clients today: “Since 1927, the [signal] has proved better on a CAGR basis than buy-and-hold, but equally important, has provided almost 50% more Sharpe than a buy and hold strategy.”
This chart pattern leans traditionally bullish indicating a strong probability of a longer-term bull market is underway.
Bottom line?
Maintaining exposure to different regions and multiple risk exposures can both enhance portfolio outcomes and potentially help reduce risk through diversification.
For U.S. focused investors who suffered a bruising 1st half, the picture continues to look more encouraging for the months ahead.
[www.investopedia.com]
Edited 1 time(s). Last edit at 07/03/2025 11:17AM by maverick1.
Just this week, the S&P 500’s shorter-dated 50-day moving average crossed above its longer-term 200-day moving average for a Golden Cross signal.
On the Golden Cross signal, Jeff DeGraaf of Renaissance Macro wrote in a note to clients today: “Since 1927, the [signal] has proved better on a CAGR basis than buy-and-hold, but equally important, has provided almost 50% more Sharpe than a buy and hold strategy.”
This chart pattern leans traditionally bullish indicating a strong probability of a longer-term bull market is underway.
Bottom line?
Maintaining exposure to different regions and multiple risk exposures can both enhance portfolio outcomes and potentially help reduce risk through diversification.
For U.S. focused investors who suffered a bruising 1st half, the picture continues to look more encouraging for the months ahead.
[www.investopedia.com]
Edited 1 time(s). Last edit at 07/03/2025 11:17AM by maverick1.
You opened the floodgates BF. Hope springs eternal with him.
It's a bit of entertainment...like those dolls where you pull the string and they have 8 or 9 predictable and programmed tracks they play.
And...? How many times has the market changed due to changes in the general, global financial market? (This frequently happens.) Who has posititioned themselves to survive financial change, and who has not? (Please do not answer this question in a forum where anyone could see your answer.)
Safe journeys, space fans... wherever you are. - Stephen Hill
Market changed? You mean volatility? Like the VIX index? It's actually low right now.
[finance.yahoo.com]
As far as "positioned themselves to survive financial change"...that's called asset diversification.
Right now, the financial markets like the certainty of the passage of the "Big, Beautiful Bill." At or near all time highs.
That bill doesn't have everything I'd like, such as more cuts, more deregulation, more claw backs from the last admin., less special interest pork, but it's a compromise we have to work with.
We can survive with a bullish U.S. financial market.
[finance.yahoo.com]
As far as "positioned themselves to survive financial change"...that's called asset diversification.
Right now, the financial markets like the certainty of the passage of the "Big, Beautiful Bill." At or near all time highs.
That bill doesn't have everything I'd like, such as more cuts, more deregulation, more claw backs from the last admin., less special interest pork, but it's a compromise we have to work with.
We can survive with a bullish U.S. financial market.
@BarefootBliss wrote:
It's a bit of entertainment...like those dolls where you pull the string and they have 8 or 9 predictable and programmed tracks they play.
Toggle User Visibility. It's now a much better place.
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