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Good Problems and Bad Problems

January 12, 2011 – 6:51 pm

Positive news from Portugal concerning their successful bond offering and Germany firmly stating that they are going to defend the EURO weakened our dollar pushing up stock prices here in the U.S.

The European issue over that last year has been pushing our stock market around and though it is much less of a problem than it was when the Greek debt issue blew up it still is an overhanging issue for our market., mostly because it affects the currency. Most investors and traders worry little over the impact on the world economy from these very small individual countries. The worry was always about the currency and what would happen. It is now clear that the larger and much healthier countries in Europe are and will continue to support the EURO so fear is being managed.

Actually, the European economy is growing and in the larger countries it is quite healthy. Add that to the rest of the world’s growth and the fear that is building today is inflation. Asia has been taking steps to cool their economies to try and slow inflation. This is a problem but it should be categorized as a good problem, unlike an economy that is falling which is a bad problem.

The stock market is still in rally mode though it is getting long in the tooth. At some point a correction is in order but since we can’t guess at when it might start stay invested.

Good Trading
Steve Peasley

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