Wednesday, September 19, 2007

500 Basis Points: Good or Bad?

Well, the Dow liked it.

But the Euro jumped--and I mean JUMPED--on the news.

So the dollar (at least as of yesterday) is less valuable than it was two days ago.

Result: we pay more for imports from PRC and other countries, and probably oil.

Next result: more US firms will be sourcing components within the USA.

That is all--for the time being.

1 comment:

Anonymous said...

Oh, don't just leave it there. Let's not forget the soft commodities continuing their ascent as foreign dollars bid up the grains with weaker US dollars. While sourcing could possibly see some benefit, it is difficult to make the case that capex would be allocated so as to produce those sourced goods in a falling macro environment that is probably heading for recession if not in recession. I say the latter given that this was putative cause of the rate cut.