So the US dollar has weakened by 1% this week and the Dow Jones index is up 3.5% through Thurs.
Crude is up $5 a barrel over the week, which is roughly a 10% move and other commodities have moved in tandem including gold.
Now of course a weaker dollar helps everyone in the world except us. The amount of pain in the BRICs and OPEC over the strong dollar is quite evident, so a pullback was needed, but for how long is the question.
Will we see $60 – $70 oil by the holidays? I don’t think it will get that high since the US is the cleanest dirty shirt in the pile.
Time will tell who the sellers of dollars are, but China in defense of the renminbi would seem to be the largest agent in the market.
It appears that central banks are being proactive this time and not waiting for the first shoe to drop.
Since the 29th of September, Glencore, Europe’s commodity giant that I wrote about as being this year’s candidate for Lehman Bros., its stock is up 94% at 135, still well off its 52-week high of 339.
While a capital injection and/or going private were rumored it seems that buoying copper prices off their lowest prices in decades seem to have done the trick for the short term.
Ironically, like 2008 after Lehman ex-Morgan Stanley CEO John Mack is out everywhere blaming short sellers for the attack on Glencore. Mack is on the board of the commodity giant.
You’ll recall Mack vigorously defended Morgan Stanley in 2008 with his short sellers are killing the investment bank. It worked then, perhaps it will work now.