Euro Strength Could Be an Important Ingredient to a Sustained Market Rally

The Euro broke $1.30 to the U.S. Dollar for the first time since February 9. I am finally seeing some multinationals getting a nice bid as the USD weakens.

Philip Morris International (PM) and McDonald's (MCD), both of which were hammered as the markets fell and the USD strengthened, could get a jet propelled tailwind by strengthening global markets and EUR.

As more U.S. stocks rely on foreign income streams than those that don't, the EUR strength could be an important ingredient to a sustained market rally.

Disclosure: At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC was long shares of MCD and PM --- although positions can change at any time.

Comments

[ain't no fo...:]

EUR has tried a few times to really break out and backed down... hoping this is the time, could help multinationals and the commodities/materials stocks

wow- just checked my chart - nice breakout this morning out of a 2 day basing pattern - trading at 1.312 up a cent

Mar 18 10:05 AM

[carey_jim:]

It isn't clear at all that Europe will be economically stronger than the United States in the near-term future.

Europe faces several problems that the United States does not. Linguistic and cultural disunity is the first. The related disunity over economic policy is the second.

Europe will have (and has had in the past) a very difficult time coming to agreement on a unified fiscal and monetary policy, not to mention other economic problems.

The European Union is only one more attempt, in a long history of such attempts, at unifying Europe. If history is any guide, this union will be just as problematic as the others.

Think of the difficulty we have in the United States over problems of water distribution among the western states California, Nevada, Arizona, etc., for example, and the political battles we face with different interest groups within the various states.

Multiply those battles by ten and you have Europe.

Mar 18 12:23 PM

[samwise:]

with "baliistic missile" ben on the loose who the hell knows, right? never seen how debauching the currency and generating inflation has EVER resulted in anything good. Lord knows I wouldn't want to be pegging my currency to this dog. Even El Salvador will probably have to give up the peg!

Mar 18 04:29 PM