Market Reflections 3/19/2009

Momentum from yesterday's move by the Fed to buyback more than $1 trillion in agencies and Treasuries cooled in Thursday's session which saw stocks give back gains and the dollar tumble further. The use of monetary inflation as a policy tool raises the risk that price inflation may take off before policy makers can reverse the process. The deep drop in the dollar, losing another 2 cents to end at $1.3672 against the euro, is dramatic evidence of this concern. Further evidence is the big gain underway in gold, up another $20 to $959.40. Inflation risk is sweeping commodities in general higher including oil where WTI, despite yesterday's gain in inventories at Cushing, ended at $51.37 for a more than $2 gain. The stock market ended lower with the S&P 500 down 1.3% at 784.04.