Daily Investment Interpretations

November 9, 2009

2009-11-9: The markets melted up today. The Dow hit a new 2009 high. The NASDAQ Composite exploded 41.62 points, (1.97%) to end at 2,154.06, the Dow jumped 203.52 points (2.03%) to end at 10,226.94, and the S&P 500 garnered 23.78 points (2.22%) to 1,093.08. Oil added $2.00 to $79.27 a barrel, while gold hit a new high at $1102. The VIX fell 1.04 to 23.15. 
   
One of the reasons for exuberance was the fact that world leaders at the G20 Conference announced that the global economy seems to be on track for recovery but that interest rates will remain low. Also the Federal Reserve announced on Thursday that it has no plans to raise rates any time soon. This means that the dollar remains the preferred currency for the "carry trade"... borrowing money in dollars at a low interest rate and investing them elsewhere at a higher interest rate. If the dollar falls against foreign currencies and you own foreign assets, your assets (e. g., Eurodollars) will rise in value against the dollar even if you just leave your money (e. g., Eurodollars) in, viz., a Swiss bank account. Also, for reasons that aren't clear to me, for the past few weeks, a falling dollar has correlated closely with a rising U. S. stock market.