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November 9, 2009


Market behavior is mind-numbing but there are those stepping outside the logical box trying to reason with what’s happening like this note from Black Swan Capital today:

“Enough is enough. The correction in risk-appetite trades has gone on long enough.

Maybe the logic goes a little something like this:

- Global economic growth is improving ...
- But it’s not recovering all that fast.
- And periods of low growth will necessitate further fiscal and monetary stimulation ...
- Which means interest rates will stay low.
- Easy money will support asset prices ...
- And continued risk-taking will act in a self-fulfilling manner to drive up prices.”

Ok. Good. Stop there. Go take risks!”

Letting the dollar fall is a policy and it means multinational firms doing business overseas will earn more when converting profits to dollars. This is the so-called dollar “carry trade” at work as commodities and stocks are bid higher. It’s the result of the political will to “inflate or die” as evidenced by the Fed and the G-20.

But doesn’t that hurt US consumers given the higher cost of imported goods? Don’t ask good questions. Let’s move on.

Stocks rallied mightily today but volume was anemic. Breadth, of course, was overwhelmingly positive.

click to enlarge

Subscriber Dave Hurwitz calculates the volume in his own fashion and determines the NYSE just missed a 90/10 day.

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Source: Tuesday Outlook: Weak Volume, Weak Dollar, Big Rally