I do a lot of quick 30 seconds-to-a-minute radio hits each morning for various CBS affiliate stations around the country. They call my desk when the futures are down or the market’s getting killed – which is the only time Main Street wants to hear about stocks in their regular news diet. Each morning that the market is down big or notably, I’ll get at least one call from a producer who’s looking for someone to explain it.
They are getting bored with the fact that my answer for why is always the same: a down euro means down stocks and it will stay that way until something changes.
Because the euro versus the dollar is the single most important fulcrum point for stocks right now. A down euro means a strong dollar and weak stocks, period. That’s how you have a day like yesterday, where unemployment and payrolls exceed expectations in both the headline numbers and the internal stats – yet the stock market falls.
Let’s look at what happened with the euro this week, one of its worst weeks ever…
The euro fell for a fifth week versus the dollar in its longest losing streak in almost two years on concern Europe’s debt crisis is worsening and as data showed the U.S. labor market is strengthening.
The 17-nation currency slid to a record low against the Australian dollar and traded at the weakest level in more than 11 years versus the yen as demand at bond auctions spurred concern European nations will struggle to sell debt…
The euro fell 1.9 percent to $1.2717 yesterday in New York in its biggest five-day loss since Dec. 16. It hasn’t fallen for five straight weeks since February 2010. It touched $1.2698, its weakest level since Sept. 13, 2010. The shared currency depreciated 1.8 percent to 97.90 yen and reached 97.88 yen, the lowest since December 2000. The dollar was little changed at 76.97 yen.
It was the worst week for Europe’s common currency in four months.
This kind of action in the euro doesn’t make it impossible to own stocks, but it makes it harder to own stocks than many expect. Because it means action that doesn’t necessarily make sense on a day to day basis. It means there’s a heavy lid on any potential upside for now. And it means a lot of trader frustration – the same kind that manifested itself in 2011.
New calendar, same bullshit.