Stocks Ended Lower Yesterday, Bank Fears Weighed, While Investors Cheered Better Than Expected PPI

The U.S. dollar is the king of currency... It leads the global economy. And all other currencies depend on what's happening with it.

When the U.S. Dollar Retreats, These Stocks Surge  By Pete Carmasino, chief market strategist, Chaikin Analytics      The U.S. dollar is the king of currency... It leads the global economy. And all other currencies depend on what's happening with it. It's easy to see this relationship in international transactions. Since the dollar is the world's reserve currency, that's how many of these deals are settled. Take the Taste America grocery store in England, for example... The store pays to import goods like cereal, coffee, and tea in U.S. dollars. That's how it pays shipping costs as well. All those costs were up in 2022 due to inflation and higher oil prices. Plus, back in October, the dollar was hitting multiyear highs. So the store was losing about 20% on the exchange rate between the dollar and the British pound.  Put simply, a strong dollar weakens the worldwide economy. The reason is simple... A strong dollar generally comes with higher interest rates here in the U.S. And of course, the Federal Reserve has been hiking rates over the past year. Since higher rates make borrowing money more expensive, growth slows both domestically and internationally. But in recent months, the dollar has retreated. Its value is down nearly 11% from its September peak. And as I'll explain today, that pullback is boosting one group of stocks... Recommended Links: The ONLY Stock You Need for 2023 Greg Diamond is giving away the name of his No. 1 stock for 2023. You could've already doubled your money five different times with this stock using his strategy, which dates back to 1876. It's a big part of how Greg managed up to $900 million a day on Wall Street, where he booked an average profit of $155,000 per day. Click here to learn the ticker. ** THIS WILL DEFINE MY LEGACY ** To ring in the new year, Dr. David Eifrig is reopening his original briefing on his No. 1 biggest discovery in 15 years (and more than four decades in the markets). He's already shown readers big double-digit gains since last July... even while the broader markets suffered. But see why 2023 could be the best year yet for this strategy, right here. The group of stocks I'm talking about is emerging markets. Emerging markets are in the process of becoming developed economies like the U.S. or the United Kingdom, but they're not quite there yet. Because of that, companies in these countries can experience rapid growth. And that can lead to greater returns for investors.  We'll focus on the iShares MSCI Emerging Markets Fund (EEM) today... As its name implies, this exchange-traded fund ("ETF") tracks a basket of more than 1,200 emerging market stocks. Roughly 32% of the portfolio is in China. And India (14%), Taiwan (14%), and South Korea (11%) each make up more than 10% of the ETF as well. The chart below compares the performance of the dollar and the iShares MSCI Emerging Markets Fund over the past three years. Take a look... This chart might look a little complex at first glance. But one thing is clear... An inverse relationship exists between the dollar and EEM. As the dollar's value goes up, the ETF's value goes down – and vice versa. Start with what happened from the worst days of the COVID-19 pandemic through early 2021. The dollar's value dropped nearly 14%. And EEM soared 71% over that span. Then, from early 2021 through this past September, the dollar's value surged about 28%. And sure enough, EEM plunged around 33% over that period.  Now, notice what started happening in September... The dollar has lost nearly 11% of its value since it peaked on September 27. Over the same span, EEM is up about 16%. That's a 27-percentage-point outperformance. You might be wondering why the dollar's value started dropping even though the Fed is still raising interest rates. And frankly, it's a bit convoluted. But it boils down to this point... Bond prices and yields are inversely correlated. As the Fed raised rates, yields on bonds surged as well. That caused bond prices to plunge. But around September, investors decided that bonds were attractively priced. And they started buying again. That drove down rates. And in turn, the dollar's value fell as well. In the end, a weaker dollar is a tailwind for EEM (and emerging markets overall). And at least for now, we can expect the recent trend to continue... The king of global currency is weakening. And emerging market stocks are thriving. Good investing, Pete Carmasino Market View Major Indexes and Notable Sectors     # Hld:     Bullish     Neutral     Bearish Dow 30 +0.30% 10 18 2 S&P 500 +0.40% 143 288 68 Nasdaq +0.69% 34 50 16 Small Caps +0.66% 603 949 341 Bonds -0.94% — According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are Bullish.. Major indexes are mixed. *  *  *  * Top Movers Gainers PCAR +51.89% ILMN +3.80% WFC +3.24% SWK +3.06% TGT +3.04% Losers NOC -5.44% F -5.29% GM -4.75% DISH -3.78% DAL -3.54% *  *  *  * Earnings Report Reporting Today Rating Before Open After Close MS CFG, UAL GS, SBNY No earnings reporting today. Earnings Surprises WFC Wells Fargo & Company Q4 $1.45 Beat by $0.35 JPM JPMorgan Chase & Co. Q4 $3.57 Beat by $0.47 DAL Delta Air Lines, Inc. Q4 $1.48 Beat by $0.16 BLK BlackRock, Inc. Q4 $8.93 Beat by $0.86 BAC Bank of America Corporation Q4 $0.85 Beat by $0.08 *  *  *  * Sector Tracker Sector movement over the last 5 days Discretionary +5.78% Information Technology +4.62% Real Estate +4.44% Materials +4.26% Communication +3.87% Energy +2.73% Financial +2.12% Industrials +1.54% Utilities +0.46% Health Care -0.16% Staples -1.37% *  *  *  * Industry Focus Transportation Services 18 21 9 Over the past 6 months, the Transportation subsector (XTN) has outperformed the S&P 500 by +4.97%. Its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #13 of 21 subsectors and has moved up 5 slots over the past week. Top Stocks R Ryder System, Inc. SNDR Schneider National, ARCB ArcBest Corporation *  *  *  * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, click here. You're receiving this e-mail at diansastroxz.forex@blogger.com. 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