Tuesday, September 23, 2008

The Top 5 Market Drivers for the Week of September 22nd

This is a new section, but I hope it catches on. I read somewhere that blog readers love lists. Here are the top things I think are driving the markets right now, as well as one thing that doesn't matter:

  • The Credit Crisis and Demand Destruction - We stand on the precipice. The economy is at a tipping point, and if the $700 billion dollar defibrillator that the Ben and Hank have proposed does not create a feeling of stability, certainty, and calm in the financial markets...we are in for a long next five years. Who needs history books when you can live through a great depression yourself???
  • The US Dollar - Everything related to the bailouts and stimulus packages are inflationary. That should push the value of crude and other commodities higher, as seen on Monday.
  • Global Economies and Global Currencies - Thank Goodness we aren't in this alone!!! Most every other major economy in the world is in the tank, too. Global economies growing more slowly take the burden off the demand side of the equation for raw commodities, and should help prices under control. And, as other country's central banks lower interest rates to juice their respective economies, the US Dollar looks less bad. Basically, it makes the dollar a little less worse. This should exacerbate weakness in the commodities markets.
  • Crude and Products Supplies - Hurricanes did shut in production and refining along the gulf coast - and we will need to watch stocks levels closely as those facilities come back on line.
And, under the heading of "This doesn't matter, even a little bit":
  • Geopolitical Instability - There is just too much else to worry about.

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