Confidence is Relative in Markets

The DJIA’s eratic-ness (regular 100pt fluctuations then flat for weeks) has me looking for another metric of economic confidence, like a stronger US Dollar. (What’s with the Dow, S&P, and NASDAQ following each other in lock step?)

Back in August, Pete suggested the reason the DJIA was climbing was the same reason oil prices were climbing a year earlier – a devalued US Dollar.

Sure enough, as the DJIA ebbed and flowed, the Dollar-to-Euro conversion flowed and ebbed. Today, the DJIA closed just a hair above 10k (yes, I know) and the Dollar is worth 72.9% of a Euro.

I still think there’s some ‘air’ between the Dollar’s value and the stock markets, but I think they’re more in-line with each other. Unfortunately, the weaker Euro in fact means a weaker Euro – not a stronger Dollar. Greece’s, Spain’s, and Portugal’s debt is devaluing the Euro and driving demand for the “world’s reserve currency”.

While I feel badly that a new currency hit a rough patch, the notion that some states’ books severly impact a union’s currency – it feels like another way Europe is becoming more like the US.

A comment from the above link I quite enjoy:

“the US is a leading indicator for the rest of the world. Don’t count your chickens.” – Henrik Mintis

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