Pretty funny chart courtesy of ZeroHedge showing today’s price action on the ‘news’ of a rumor that Germany was going to bail Greece out of their sovereign debt problems.
The interesting thing to note here is that it would appear the market is still pricing in a decent probability of some form of assistance coming in, possibly from another country.
The Business Insider has posted an article here that reflects what I think is the first signs of the positive effect the weakening dollar is having on the economy.
Dollar Futures (/DX) have fallen by over 20% since it reached a local maximum at the end of last year, and a lot has been said about the negative ripple effects that that is having. Certainly, import prices are increasing, countries that have their currency pegged to the dollar are having to weaken their monetary policy to follow the fed, and the Republicans in Washington are harping on the White House for failing to live up to its strong dollar policy.
However, behind closed doors, these same politicians are actually supportive of a weak dollar, at least in the short term. One reason for this, as shown by this report, is that it will increase exports since America’s products become favorably priced on the open market as the dollar declines. Certainly coal (ETF: KOL) is a beneficiary of this, but other American exports such as steel, chemicals, and medical supplies will be helped. There isn’t much good to be said about domestic demand, and the hope is that foreign consumers will step up first and because of the weak dollar, American products will look relatively cheap.
To be specific, this development should benefit coal miners such as Peabody Energy Corporation (BTU), Arch Coat (ACI) and Massey Energy Company (MEE), but will hurt coal-centric utilities such as American Electric Power (AEP) as they compete for supplies with hungry overseas users such as China.
Shipping companies should also benefit, as water remains the only way to ship bulk goods between the US and other continents. Additionally, domestic transporters like Norfolk Southern (NSC) and Burlington Northern Santa Fe (BNI) will benefit as coal is transported from the mines in the Mid West to the ports at the coast.
Disclosure: Long BNI