Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

US Stock Market Indices Continue Their Upward Trend

Stock-Markets / US Stock Markets Oct 10, 2010 - 02:39 PM GMT

By: Peter_Navarro

Stock-Markets

The good news: The US market indices continue their upward trend last week as the Dow Jones industrial average broke above the 11,000 mark for the first time in over five months. The bad news: this latest market uptrend appears not to be driven by good economic news but rather by an emerging "carry trade" driven by the easy money policies of the US and a number of other countries around the world, including Japan.


The carry trade game here is simply to borrow money from the Federal Reserve or Bank of Japan via low interest rates and invest in the stock market. In this carry trade, the dollar falls and the US markets go up but the net effect in real, dollar adjusted terms is negligible.

From this perspective, any price appreciation in the stock market is merely offsetting negative currency effects. This is hardly a bullish scenario. That's why while this may be a good market for short-term traders, it is a dangerous one for longer-term investors tempted to move cash off the sidelines.

What bugs me about all this is a Wall Street "patriotism" that equates the debasement of the currency and easy money with something it must be good for the country because it's good for the markets. What a crock.

All of this will continue until countries around the world confront China on its mercantilist and protectionist trade policies. China's grossly undervalued and manipulated currency alone is driving the monetary policy not just of the United States but also most of the countries in Asia. A weak Chinese yuan forces Japan, South Korea, Taiwan, and all of China's major competitors in Asia to try to drive their currencies down. Meanwhile, the commodity countries like Brazil and Australia are going bonkers because their currencies are bearing the lion's share of the burden of China's beggar thy neighbor currency regime through currency appreciations of their own – and result in export difficulties.

What I find really irritating as well is the rush of American journalists – Exhibit A is Fareed Zakaria's mindless apology for China in this week's Time magazine – to support Chinese mercantilism and protectionism. It's not even blind ideology on Zakaria’s part. It's just plain arrogance and stupidity. If you get on enough TV shows and get asked your opinion enough, you start to believe you actually know something. My guess, however, is that when the light weight Zakaria is on any TV set, they have to nail his shoes to the floor so he won't float away.

Anyway, that's my rant for the week and I'm sticking to it. The sober analysis is that this is an upward trending market with a wall of worry that is primarily macro-based. Climb it with caution.

Stocks that I am holding: SNTA, DEPO,DUSA,LPTN,NRGX,QTWW,SVMI,SNT,SBOTF,CYB,TBT,MITI,
GME(SHORT),DTV,VVUS,HOV,TEVA,SOMX,MDVN

Updates: I cashed out the rest of my Chelsea – will reload if it dips below $5. I took a small loss in YRCW, which did a reverse stock split and wiped out all the fun speculation on a penny stock. I will add to TBT every time it drops a buck.

As a final note, there are often typos in this newsletter and the culprit has to do with the fact that much of it is dictated using Dragon Naturally Speaking. The accuracy rate is quite high, but some silly things do slip through. So if you see something that doesn't look quite right, trust the syntax and make your own internal correction.

Navarro on TheStreet.com

Click here to review my videos on TheStreet.com.
———-

Professor Navarro’s articles have appeared in a wide range of publications, from Business Week, the Los Angeles Times, New York Times and Wall Street Journal to the Harvard Business Review, the MIT Sloan Management Review, and the Journal of Business. His free weekly newsletter is published at www.PeterNavarro.com.

© 2010 Copyright Peter Navarro - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in