Pisani: Strong Dollar/Strong Stocks

Stocks closing near highs for the day. The key story: the correlation between a weak euro/weak equities has been broken. There is now a positive correlation between the dollar (up) and the stock market (also up)—what's up with that?

I said months ago that some day in the bright shining future the stock market would go up along with the dollar.

That day has finally come. It's not an anomaly; in fact dollar up/stocks up has been the normal historic trend. It has of course corresponded with the announcement of that $1 trillion aid program in Europe from the EU/IMF. So it's clearly partly about euro weakness, rather than dollar strength.

But bulls are arguing that the U.S. economy will outperform Europe; consensus is for some 3 percent GDP growth in the U.S., perhaps only 1.5 percent growth in Europe.

That argues for dollar strength, as well as stock strength.

Goldman Sachs has been strong all day at the expense of Morgan Stanley . on the WSJ article that federal investigators are looking into whether MS misled investors about mortgage derivative deals. Morgan says they nothing about any federal investigation.

This is now an industry-wide investigation. William Blair titled their note this morning: "Regulatory Scrutiny Balancing Out—We See Value Here" (referring to MS and GS). They go on to note: "This article should serve as public confirmation of what everybody should already know: that the regulatory scrutiny related to the marketing of mortgage-related CDOs is industrywide, ongoing, and seems to have broadened."

There is a lot at stake here: these kinds of headlines make it easier to push through financial regulatory reform, which is now in its final stages.

IPO's take another shot. Last week was another tough one for IPOs, which saw several cancellations. They are trying again tonight, when no less than 4 IPOs will be coming to market, three on the NYSE, one on the NASDAQ.

The big one will be Express, the famous apparel maker, a Limited spinoff, seeking to raise 16 million shares at $18-$20.

There's also an aluminum maker:

Noranda Aluminum

16.6 m shares at $14-$16

And a transportation/logistic services company:

Road Runner Transportation  

10.6 m shares at $14-$16

Over on the NASDAQ, there is a designer of mobile navigation services:

TeleNav  

7 m shares from $11 to $13

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