May 11, 2009 (FinancialWire) Dr. Joe Duarte recently noted: The Currency Euroshares (NYSE: FXE) ETF is holding up quite well despite evidence that the European economy is far from any sustainable recovery.
Duarte added: Currencies mirror the economic and political health of their country or region. Weakness in one or both of these variables usually leads to a weak currency. Yet, the euro, despite a weak economy is not falling out of bed, especially with regard to the U.S. dollar.
Meanwhile, the dollar, which reflects the state of the U.S. economy and its political health, is weakening, despite a popular president and an economy that is showing improvement.
So what gives? The answer is likely more complicated than we can figure out. But one or two things are clearly involved. One isthe huge amount of U.S. debt that will be piled on as a result of the deficit spending that lies ahead. The other is the fact that the U.S. political system is polarized beyond repair.
When you put those two things together, you get uncertainty. Sure, Europe is weak. But thats not a surprise. And neither is the outcome. Things will either get better or worse.
With the U.S., though, its different. How will the rising debt affect the economy? And is the Obama government going to be able to make good on its promise to spread the wealth and to keep the worlds economic engine roaring with all that it plans to spend and to attempt to accomplish.
Duartes conclusion: The market, rightly or wrongly, seems to be betting that a weak Europe is more predictable than a U.S. in transition to something unknown.
Duartes IntelligentForecasts.com provides free news coverage and analysis, and his daily articles and news summaries offer recommendations and analysis for ETFs, and individual stocks in the technology, health and biotechnology, and energy sectors. Duarte has combined expertise in health care, energy, and the effects of politics and global intelligence on the financial markets offer a unique blend of insight and information to thousands of active investors and political and intelligence aficionados around the world on a daily basis.
He is the author of: Futures And Options For Dummies, Successful Energy Sector Investing, Successful Biotech Investing and co-author of After-Hours Trading Made Easy. In early 2001, in Successful Energy Sector Investing, he correctly predicted that Venezuelas political problems could lead to an energy crisis in the United States. He has also appeared as a weekly guest on Market Mavens Radio and has logged appearances on KNX radio in Los Angeles, Financial Sense.com radio, and Wall Street Radio.
One of CNBCs original Market Mavens, Dr. Duarte has been writing about the financial markets since 1990. His articles and commentary have been featured on CBS Marketwatch, Barrons, Smart Money, Medical Economics, and in Technical Analysis of Stocks and Commodities magazines. In 2003, Doctor Duarte received second place, in the professional section, of the Medical Economics Investment Challenge with a 12-month return of 42%.
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