Today we will be talking about how fast the dollar is going up, how will that affect your portfolio, job and other assets around the world, and answer the question, “Have the markets peaked?”
The Fed is supporting the market
On last week’s Investors Insights we talked about how the market is really being moved by the Fed. As the week went on, the Fed announced they have removed patience from their statement. This made everyone, as well as the markets, concerned the Fed would raise interest rates. However, the Fed lowered their expectations for economic growth. While that sounds bad for the economy, it is good for the market because it shows the Fed is supporting it. At fi-Plan Partners we are still in the opinion that interest rates will not be going up any time soon.
Last week’s market snapshot
Last week was great for domestic and international markets. Both the DOW and the S&P 500 were up 2%. The bank of Japan continued its bond buying program and other countries are looking to reduce energy cost to encourage consumer spending.
Housing starts went down 17% in February which is the lowest in four years. There is speculation that this is because of tighter mortgage lending.
What to expect this week in the market
Investors will get two more looks at housing numbers this week with new and existing home sales reports. Investors will also get to see the Consumer Price Index (CPI) numbers, which helps determine inflation and deflation. Durable Good Orders and Gross Domestic Product (GDP) numbers will also be coming out.
The fast and furious dollar
The dollar is continuing to strengthen and it is causing problems for companies that sell multi-nationally. When the dollar goes up, their goods become less competitive. On the other side, smaller to mid-size domestic companies (small caps) are doing better because of a stronger dollar. The speed that the dollar is rising is faster than ever. This is causing commodity prices to come down, like the cost of milk and gas. Since all commodities are priced in U.S. dollars, international money is flowing into the United States making America an oasis in the desert right now. That’s why you may be seeing profits falling but the prices in equities are going up.
Have the markets peaked?
Since the NASDAQ and S&P 500 are at an all time high, the question is, “Have the markets peaked?” While the typical thought is to always buy low and sell high, there is also the ability to buy high and sell higher. Just because there is a new all time high doesn’t mean the markets peaked. Remember, every new market high eclipses an old market high. When you peel back the onion you will see there are a lot of positive things going on in our country and in the markets. Investors will be seeing a lot of negative news in mainstream media but there are many positive stories “on the back pages.” So, have the markets peaked? In our opinion, we believe that it could go higher.
Send us your comments and questions.
fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The economic forecasts set forth in the presentation may not develop as predicted.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Stock investing involves risk including potential loss of principal.