Is the market growing or flat?
With the price of oil passing $90 a barrel I can not help but wonder if the declining value of the American dollar is negating all of the gains the DOW is making. As an exercise I took a look at the graph of the value change in the US Dollar compared to the Canadian Dollar and matched it up with the growth of the DOW.
A scary picture begins to emerge, does it not?
When you compare the growth of the market to the decline in the value of a dollar it begins to look like the market is flat, if not falling behind.
Not long ago the US Dollar and the Euro were 1:1. Today you need to spend about $1.50 to buy a Euro. Looking at it that way just how expensive is oil? That $90 barrel of oil only costs 60 Euros. If oil was back at $60 a barrel would you still consider it expensive?
The last time the US Dollar was even with the Euro was back in late 2002. At that same time the exchange rate between the US Dollar and the CDN Dollar was $1:$1.60. How the mighty have fallen.
Yes, the market is booming, but is it really booming or is it booming because the US Dollar is dropping in value? I hate to be a doom and gloomer but it looks to me like the wonderful growth years of the Bush economy have been greatly overrated.
