junkyarddog

Options Trader: Thursday Outlook

who: It's not only about commodities or automobiles. I was thinking more in terms of services, which get cheaper for America to sell out there. The US is having record exports and I'm not sure if it's a good thing to stop this trend.

Europe will hold off inflation (so they hope) but at what cost? Their already slow economy will be even slower. Then their unemployment will rise and they'll be risking an even steeper recession.

It's a tough choice, but personally, choosing between a) having a job with inflation or b) be unemployed with no inflation, I prefer having a job ("a").

I know economic purists, especially the gold bugs, think the job of the Fed ought to be only to protect the dollar, making it strong. Question: what good is a strong dollar in the middle of a depression?The Fed also needs to foster economic development and this balance is tough. I'll be the only American out there saying the absolutely outrageous, I even risk being lynched: given the circumstances I believe Barnanke is doing a good job. There, I said it. :-o

Options Trader: Thursday Outlook

Phil, I read your articles daily, with great interest. Reading what you have to say is the information I look forward most each day.

Allow me to take a "contrarian" view: the weak dollar being good for the US economy. The weak Japanese yen allowed Honda, who only manufactured motorcycles until 1968, to eat alive (destroy!) Detroit in the 70's and beyond. Why? They sold their cheap piece of junk Japanse cars and collected the sales in dollars, strong at that time.

A weak dollar boosts US exports and creates opportunities. Low interest rates keep things moving. The worst we can do now is slow even further our economy with higher interest rates AND increase unemployment. If people don't have jobs, yes, they won't buy oil, but... they won't pay for their mortgages either.

Now, ECB raised rates. What do you believe is going to happen? Stronger Euro, weaker dollar! Whose products then become more competitive in the market? America's.

A weak dollar raises the oil price - so they say -- but let's face it: fundamentals are not playing a role here. The dollar can go 1.30 to the Euro and the oil barrel price will stil increase. So, forget fundamentals there.

Thanks again for you incredible articles every day. You definitely make your readers think!