Like so many other things about the stock market, it makes no sense for analysts to attribute last week’s sell-off in the Dow, including yesterday’s 315-point drop, to the collapse of oil prices.
Of the 30 Dow stocks, only two — Chevron and Exxon — are oil companies which can be expected to suffer from declining oil prices; however, the other 28 Dow companies should benefit, since they provide goods and services that will be cheaper to produce with cheaper oil. The Dow’s retail companies like Walmart, Home Depot, and McDonald’s should especially prosper.
As for a stronger dollar, we know that keeping a nation’s currency low relative to the U.S.’s dollar, as Japan has been doing for decades, makes that nation’s products cheaper and more attractive in the U.S. Otherwise, Hondas and Toyotas would not be flooding our highways. And now that the euro has declined more than 10% recently against the ever-more-obese King Dollar, lower-priced BMWs and Audis will soon be joining the influx of Japanese imports.
Wouldn’t it be nice if all we had to do was listen to experts like Larry Kudlow, follow their advice, and make millions in the stock market? But they’ve been wrong so often that their advice is merely interesting, not anything to take seriously.
Larry is usually pretty good. he is a supply sider. but he supports amnesty.