Bottom line

At the Group of Seven meeting this weekend, Treasury Secretary Paul O’Neill reiterated that the United States still advocates a strong dollar policy and, in fact, has never wavered from it. Whether the currency markets will pay any attention to his remarks — or any other statement from the finance ministers meeting over the weekend is unlikely. And with a dearth of new economic data available, the currency market players will undoubtedly follow the equities markets’ movements closely. For the dollar, that could mean further downward pressure.

With only two weeks left to the second quarter, it is apparent that a broad-based recovery in global industry is in place. Solid increases have been reported for a wide range of countries ranging from Britain to China to Mexico. These gains are mirrored by increased world exports. As a counterpoint, the world’s biggest buyers — U.S. consumers — are slowing to catch their collective breaths after spending heavily when the economy was in recession. The United States needs support from other major industrial countries such as Germany and Japan to pull world growth up to its potential.

However, these improvements have yet to be felt by skittish equity investors who still long for 90s-style gains, perhaps forgetting about the faulty record keeping that helped that era along.