Market Rally? A Matter of Perspective

We are just minutes away from the stock market attaining it's 9th week in a row with a gain! Markets have not had so much momentum since perhaps the bull runs of the late 1990s. But while US investors may be smiling as their 401(k)s expand close to previous levels, those outside of the US may not be seeing such gains.

US market gains abroad are definitely beginning to be muted by declines in the US Dollar. Today's downward move in the dollar is the second day in a row that markets received a wake-up call as to the US Government's fiscal policies. Yesterday, bond yields rose sharply as investors demanded higher yields on long term treasury debt. Higher yields normally result in a stronger dollar. Not so today.

While President Obama's economic stimulus package my ultimately benefit the country, it will not be without substantial costs. Inflated money supplies and record debt levels may cause a run on US securities resulting in lower prices for US products across the board. Don't leave yourself unprotected. Be sure your positions are hedged appropriately.