...a sinking dollar and moderate inflation can be a “sweet spot” for equities. Equities are claims on real assets: land, capital,copyrights, trademarks, brand loyalty, etc. With labor costs stable, rising prices should widen profit margins. And as the dollar depreciates, U.S. firms will seem like a bargain to foreign investors...
The increasing pace of economic activity continues. Interest rates will be higher, but not high enough to compete with stocks. There are good fundamentals behind the recent stock market rise, and these fundamentals should remain in place through the rest of this year.
--- Jeremy Siegel, Commentary on 4Q09
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