[sd_mikey]

Between the Feds quantitative easing during the Great Recession and now their buying of corporate bonds (sometimes junk), it’s difficult to discern the true value of companies. Easy and cheap money can make balance sheet appear pretty good at first glance.

[nemo44x]

The USD losing value relative to peers is helping the market as well. Most companies generate significant revenue overseas but report in USD. As the dollar falls in value they end up with more dollars when converting.

If the dollar continues to weaken then I’d hedge towards the markets continuing an upwards trajectory.

[ericmay]

Is the dollar weakening? I think right now the Fed is trying to prevent deflation because of the demand for dollars.

But if the dollar weakens, it doesn’t weaken with no benefits, America starts selling and exporting more as products and services become cheaper.

[nkurz]

One common way of measuring the strength of the dollar is to compare it to a "basket of currencies": https://www.investopedia.com/terms/u/usdx.asp

By this standard, the US dollar is down about 10% from its post-COVID crash high (103 -> 93). But over a longer time scale, it's up about 10% from where it spent most of the 2000's: https://www.marketwatch.com/investing/index/dxy/charts.

So I think the answer both "yes, the dollar is signicantly weakening" and "the dollar is still slightly stronger than its recent historical norm".

[ericmay]

Yea great info to share. Thanks for that!

I’m wondering if that describes this scenario: there aren’t enough dollars, there is high demand for them, but as they get printed they go into securities.

What do you think?

[nkurz]

I don't feel I understand well enough to offer much of an opinion, but I think that captures a lot of it. An important addendum might be that a lot of foreign debt is dollar denominated, which means that dollars are often required even to service debt that is not US originated. In my amateur opinion, this is a good primer: https://www.lynalden.com/global-dollar-short-squeeze/