Dollar bulls beware; the buck is benefitting from bad news around the globe much more than it is returning to prominence. Take a minute and return to fundamentals. The economy is in recession. Unemployment is rising. Consumer prices are up sharply. Foreclosures continue to mount. Home values are falling. Banks are failing. The only thing that has remained the same is the Fed is allowing the money supply to continue to grow at a double-digit rate. The Dollar is being devalued before our eyes, yet we hear an almost endless line of commentary about our ‘strong Dollar’ policy.

In other news, oil continued to exhibit weakness which has fueled world equity markets to pare 2008′s losses slightly. Consumers may benefit from lower gasoline prices for a while during this correction, but don’t count on too much. Lower prices will increase demand as people, eager to return to life as usual ,take to the roads for late summer trips. Regardless of what happens in America, Asia continues to grow. Absent a significant decrease in growth in the Orient, demand will continue to exceed supply.  Another possible nasty side effect is that lower prices might discourage further investment, just at the time we need it most.