Not that it is a consolation to those of you who have followed my “buy now” advice of the last month, but the U.S. dollar is appreciating very strongly relative to the euro. Recall that one of the reasons I was confident that U.S. stocks would do well even if there were an economic crisis in Europe was that there would be a flight to quality. That is, folks would sell Europe and buy the United States. That has partially happened as represented by the decline of the euro and the appreciation of the U.S. dollar. However, it seems that folks holding the U.S. dollar have so far not plunked their cash into U.S. equities. In other words, we are half way (and a critical half at that) to fulfilling my investment thesis. Yet, once there is some certainty in the strength of U.S. economic data – which is very likely forthcoming – there should be some movement into U.S. equities. More importantly, once investors have finished with their “fear puke” (a technical investment term), there should also be a strong move into U.S. equities.
Jason
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