Post: #1

If you get paid in dollars and travel you are probably doing pretty well these days.

http://news.yahoo.com/surging-dollar-may...iness.html

Surging dollar may be triple whammy for U.S. earnings

NEW YORK (Reuters) - The suddenly unstoppable U.S. dollar is posing a triple threat to American companies' profits: driving up the costs of doing business overseas, suppressing the value of non-U.S. sales and, perhaps most worryingly, signaling weak international demand.

The dollar has been on a tear, with an index tracking it against six other major currencies notching roughly an 8 percent gain since the end of June. Few analysts see its breakout performance stalling out anytime soon since the U.S. economy stands on much firmer footing than most others around the world, Europe's in particular.

For companies in the benchmark S&P 500, that's a big headwind because so many are multinationals, and as a group they derive almost half of their revenue from international markets.

"You will get some companies that have failed to meet expectations based on the weakness we're seeing overseas, so it is going to be a source of disappointment," said Carmine Grigoli, chief investment strategist at Mizuho Securities in New York.

Moreover, that weakness, especially in Europe, "is going to be critical here," he said. "It's an important component of (U.S.) earnings going forward."

And while investors and analysts have begun to figure in the negative effects of a fast-strengthening dollar with regard to the approaching third-quarter reporting period, the risk to the fourth quarter and 2015 remains largely unaccounted for.

For instance, third-quarter profit-growth expectations for S&P 500 companies have fallen back to 6.4 percent from about 11 percent two months ago, Thomson Reuters data showed.

By contrast, the fourth-quarter growth forecast is down just slightly, to 11.1 percent from a July 1 forecast of 12.0 percent. And profit-growth estimates for 2015 have actually increased in that time from 11.5 percent to 12.4 percent.

"If you try and extrapolate out to the fourth quarter and how much that currency effect is going to be, your guidance is probably going to come down for a good slug of the multinationals on the S&P," said Art Hogan, chief market strategist at Wunderlich Securities in New York.

Post: #2

fuck all that scaring. Its awesome for gas prices and for those of us that have foreign debts. PS, it also means you should invest in canadian forestry/timber stocks. They roll in it during a high USD and you should dump any canadian oil sands stock.

let me highlight that again though, a dollar that is too stong (USD) can mean the slowdown of the oilsands.

Post: #3

http://www.cnbc.com/id/102056022#.

Quote:But the rally has only just begun, analysts at HSBC said in a note published this week, who argue the greenback should rein supreme as the world's strongest currency both this year and next.

Post: #4

I guess this is just one more clue that the west is falling. Fuck it, time to buy more gold!

Post: #5

Do analysts have some good reasons why the USD is rallying?

Post: #6

It will fall, buy gold and silver.

Post: #7

Zerohedge.com is rolling over in its grave.

I heard one analyst explain it as a divergence in policy between the Fed and the central banks of Japan and Europe and he claimed the trend could last for another year.

Post: #8

(10-06-2014 11:21 AM)rudebwoy Wrote:  It will fall, buy gold and silver.

That's been said for ages.

It's like saying "your neighbor will die" or "you're going to take a shit".

Post: #9

(10-06-2014 11:21 AM)rudebwoy Wrote:  It will fall, buy gold and silver.

Your right but then Gold and Silver falls and you really lose since it doesn't earn or compound like cash does. Metals are for long term for passing to heirs. Not an investment other than speculation.

US buck will fall but in a few years when interest rates go up dollar is going to go a bit up compared to other currencies. Low interest rates have been one of the major things keeping the dollar where it is.

Quote:Do analysts have some good reasons why the USD is rallying?

I would assume the ending of quantitative easing to be a major factor. That was suppressing the buck for years.

Post: #10

The dollar is like being the prettiest sister of a bunch of ugly sisters.

Post: #11

I think the media is reading too much into this.

Basically, the US dollar index went up from 79 000 in July and has steadily rose to 86 000... But these sorts of ups and downs seem to be normal for the dollar index:


So it could very well be statistical noise, rather than an indicator of US economic performance.

Furthermore, the US dollar index only measures the dollar versus the following currencies:

Euro (EUR), 57.6% weight
Japanese yen (JPY) 13.6% weight
Pound sterling (GBP), 11.9% weight
Canadian dollar (CAD), 9.1% weight
Swedish krona (SEK), 4.2% weight
Swiss franc (CHF) 3.6% weight

(source = http://en.wikipedia.org/wiki/U.S._Dollar_Index)

Looking at the weightings, a more likely scenario is that the rise of the US dollar does not imply increased confidence in the US economy, but rather a fall in confidence in the Euro and the Japanese yen. In light of the ongoing Ukrainian crisis and the impending winter, with the possibility of Russia turning off Europe's gas supply, it makes sense that people are ditching the Euro and that would cause the US to become relatively stronger.

But I'm a doctor, not a financial analyst, so I'm just guessing here.

I think I'd first consider this statistical noise (it's hardly an unstoppable force yet, compared to past performance), and if it's not noise, then it's people panicking about the Euro, which causes the US dollar to strengthen on the dollar index score despite the performance of the US economy. (I'm not sure whether the dollar index actually means anything, it seems like one of those bizarre thumbsuck economic indicators that aren't grounded in reality).

Post: #12

(10-06-2014 10:34 AM)Dr. Howard Wrote:  fuck all that scaring. Its awesome for gas prices and for those of us that have foreign debts. PS, it also means you should invest in canadian forestry/timber stocks. They roll in it during a high USD and you should dump any canadian oil sands stock.

let me highlight that again though, a dollar that is too stong (USD) can mean the slowdown of the oilsands.

Post: #13

Isn't a strong dollar good for the oilsands? I thought oil was priced in USD, so they're paying employees, etc. in CAD and selling their oil in USD?

Post: #14

There was just an article in the NYT about this, their explanation is fairly straightforward, re a 'race to the bottom' between EU/JP/CN trying to increase inflation by devaluing their own currencies, increasing the price of imports (focusing on petroleum and other energy imports typically sold in USD) in addition to making their own goods cheaper as exports boosting their meager growth.

http://www.nytimes.com/2014/10/03/busine....html?_r=0

Post: #15

(10-06-2014 02:35 PM)getdownonit Wrote:  There was just an article in the NYT about this, their explanation is fairly straightforward, re a 'race to the bottom' between EU/JP/CN trying to increase inflation by devaluing their own currencies, increasing the price of imports (focusing on petroleum and other energy imports typically sold in USD) in addition to making their own goods cheaper as exports boosting their meager growth.

http://www.nytimes.com/2014/10/03/busine....html?_r=0

In other words they are going to do what USA has been doing and recently stopped.

Post: #16

Another take I heard on it is that the Fed did the right thing by pumping liquidity into the system after the 2008 crisis, and now the economy is slowly recovering. In contrast, the European Central Bank was more conservative, causing a recession and just recently changed its policy to provide more liquidity. Japan has been at zero interest rates for over a decade. So the dollar comes out strongest. If the US raises interest rates, this will make the dollar even stronger. The point to note is that the exchange rates are determined by the policies of central banks which change slowly, so these are long term trends.

Post: #17

(10-06-2014 03:22 PM)Sherman Wrote:  Another take I heard on it is that the Fed did the right thing by pumping liquidity into the system after the 2008 crisis, and now the economy is slowly recovering. In contrast, the European Central Bank was more conservative, causing a recession and just recently changed its policy to provide more liquidity. Japan has been at zero interest rates for over a decade. So the dollar comes out strongest. If the US raises interest rates, this will make the dollar even stronger. The point to note is that the exchange rates are determined by the policies of central banks which change slowly, so these are long term trends.

They did the 1st time but the 2nd and 3rd times was for naught.

Post: #18

Sure the dollar is rising, the Fed keeps the printing machine churning out the dollars.

The debt keeps rising and one day the printing machine will stop printing, then what!

United States of China.

Post: #19

(10-06-2014 07:33 PM)rudebwoy Wrote:  Sure the dollar is rising, the Fed keeps the printing machine churning out the dollars.

The debt keeps rising and one day the printing machine will stop printing, then what!

United States of China.

WWIII first.

Post: #20

(10-06-2014 07:33 PM)rudebwoy Wrote:  Sure the dollar is rising, the Fed keeps the printing machine churning out the dollars.

The debt keeps rising and one day the printing machine will stop printing, then what!

United States of China.

Printing more money should actually make the dollar go down, not up, i.e. supply and demand. That's what caught everyone by surprise. No the dollar is not likely to crash anytime soon and is the strongest kid on the block.

Post: #21

Aus slows down, all rich AUS people run and buy the US dollar
Canada looking like shit, and rich Canadians move to US dolllar
Russian Sanctions - Oligarchs move money to they US dollar
China loosing steam - the rich of china buy the US dollar
Europe problems - Rich buy dollar
not even including the regular folk getting into the dollar like people in Argentina
There are no certainties only probabilities, and I dont think with certainty the US economy is built on a good foundation.

Post: #22

I am jealous because Euro is going shit.

Post: #23

Olibreh stop talking nonsense.

George Soros and his crew have already shorted the dollar, look what he did to the ruble a few years back.

Sadly, as a Canadian we won't escape the downfall.

Peregrine you are spot on.

Post: #24

(10-06-2014 11:27 AM)Cattle Rustler Wrote:  

(10-06-2014 11:21 AM)rudebwoy Wrote:  It will fall, buy gold and silver.

That's been said for ages.

It's like saying "your neighbor will die" or "you're going to take a shit".

Right? I've been hearing the non-stop squawking from the Ron Paul, gold and guns crowd for the last 10 years that we should be stockpiling gold and ammo for the inevitable dollar meltdown apocalypse which is due any....minute.

I'm sick of listening to people trying to predict the future. Only good economic advice I've ever heard is diversify your assets because nobody knows what the fuck the future holds.

Post: #25

(10-06-2014 07:33 PM)rudebwoy Wrote:  United States of China.

I would actually love to see China change to a Federation model. I can't see it happening, but if it did they'd become the next Top Dog.


Anyone can think of any reasons to short USD? Is it likely Fed will return to easing within 6 months...