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Dow 10k; Gold $1060; Unemployment 9.8%; Dollar 14-Month Low – Good Times Or Bad?

14 October 2009 No Comment

Happy Dow 10k Day!  The Dow crossed this crucial yet uncrucial level of 10,000 today.  Continued optimism on the economy fueled another rally in the stock market.  The market is up big since its March lows as every knows.

The problem is that gold is high (signaling inflation), the dollar is down (meaning your money doesn’t get you as far as it did yesterday), and unemployment continues to rise.  The common argument is that unemployment is a lagging indicator, the stock market is a leading indicator, and a crappy dollar is good for our economy!

My responses to this common economic theme are as follows:

  1. How long can we continue to justify horrible employment as a lagging indicator?  More specifically, when do we need job growth instead of less worse losses?
  2. I agree that the economy is in better shape than it was a year ago, but how much better?  Enough to justify the huge move higher in the markets?
  3. This one probably pisses me off the most.  I write all the time about how a weak dollar is not good for our economy.  Start with this article here.

Preferably, I’d like to see Dow at 10k, dollar at higher levels, commodities going lower, and unemployment dropping.  Furthermore, I’d like to see less government intervention in the markets.  If this were the case, I’d be way more bullish over the time span of the coming years.  Instead, I remain skeptical on our outlook.

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