The dollar has done well in comparison to the euro and yen, with further gains expected over the shorter term. We expect the euro to strengthen into next year, and the yen to stabilize with higher rates coming to Japan. The trend of interest rates will be modestly lower until the Fed meets later this month. If the Fed raises, we do not expect further increases with the coming election. Two weeks ago, the Nasdaq was rallying while the Dow Jones Industrial Average was being pressured lower, and now the indexes are doing exactly the opposite. This fickle market does not know which way to go and seems to be maintaining a trading range with no decisive long-term moves in either direction. The volatility allows for some good buying opportunities on those extreme days on the downside, but remember to take at least partial profits when investors are euphoric. Eighteen months ago, oil was $13 a barrel with the experts expecting a move to $10 or below. Now, with oil prices up substantially, these same experts have recently increased their forecasts to up to $50 a barrel! The momentum is higher over the shorter term, but any sustainability over $30-$35 a barrel is suspect, in our opinion. Such a level will create more output by OPEC, thus making $50 unfeasible. Don’t believe the pundits that just recently jumped on the energy bandwagon.
