Wednesday, September 30, 2009

Another Reason That The Markets are Going Up: Quarter End Repatriation

The collapse of the U.S. Dollar will have a positive effect to most of the companies in the U.S which do significant business outside the U.S. So they will have higher revenues, and lower P/Es, in good part due the favorable exchange rate. Read between the lines when you see their statements.

In addition, those companies are taking adantage of the low dollar to bring back to the U.S. that foreign revene, causing the U.S. Dollar to lift temporarily at least, which is exactly what we saw.

Currency chaos continues though. The central bankers are all voicing their own concerns. Trichet (ECB), and Fisher (Dallas fed) yesterday paying lip service to a strong dollar, the Swiss are extremely unhappy and may act soon, the new Japanese government saying they are under huge political pressure to move away from their pro yen policies. It's all very chaotic.


UPDATE 9:30AM. Bloomberg reports that the Swiss have indeed acted:

"The Swiss franc declined against the euro amid speculation the central bank sold the currency to curb its advance.
The franc slid 0.5 percent to 1.5189 per euro as of 1:34 p.m. in Zurich, and fell as much as 0.6 percent earlier, the most since July 23.
“There is a very strong suspicion that they are intervening via a Swiss supra-national,” said Sebastien Galy, a senior currency strategist at BNP Paribas SA in New York. "

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