The dollar has reached all-time lows
against the euro
Posted on 10/18/2007 6:07:42 PM PDT by bruinbirdman
The dollar has plummeted to all-time lows against both the euro and a basket of global currencies amid growing fears of a disorderly rout as the US property slump spreads to the broader economy.
The greenback dived after the US 'Philly' business index dropped 10.9 to 6.8 in October, with a shock fall in new orders and inventory, raising the chances of further rate cuts by the Federal Reserve this month.
The dollar has reached all-time lows
against the euro
David Page of Investec Securities also noted that sales of toys and games were high due to fears that stocks would not meet Christmas demand following Mattel's toy recalls. Shoppers seem to have shrugged off any impact of the recent market turmoil, prompting economists to speculate that the Bank of England may wait until next year to cut interest rates.
Other data lent support to this view. Bank of England figures showed that growth in the country's broad money supply, which can fuel inflation, cooled in September but stayed high at 12.8pc.
Growth in total lending by banks and building societies, known as M4 lending, appeared entirely unaffected by the credit crisis, rising from 12.3pc to 13.1pc. Vicky Redwood of Capital Economics said: "With inflationary pressures still strong and retail sales figures supporting evidence that the economy grew more strongly in the third quarter than the Monetary Policy Committee expected, interest rates look likely to stay on hold until next year."
The housing market, however, showed signs of cooling. Data from the Council of Mortgage Lenders revealed a stark 12pc decline in mortgage lending over the month, around twice the average fall in August.
Separately, the ONS released data giving a gloomy picture of the state of the public finances, in a fresh blow for new Chancellor Alistair Darling.
Public sector net borrowing, the Government's preferred measure of the public finances, rose to £7.4bn last month, the highest September borrowing on record and above expectations of £6bn.
Howard Archer of Global Insight said: "With slowing growth, a softening housing market and substantially lower City bonuses all likely to weigh down on tax revenues, the prospects for the public finances look worrying."
I rebalance 1-2x a year on average but during several peaks I moved 80% of my money to bonds including in the beginning of August at 13800 and moved 100% back to the same mutual funds at ~12800.
Way up in what, physical gold? Gold has to go above $2,000 to match 1980 inflation adjusted.
Some Freepers believe that sexual pleasure is wrong, and sinful, even in the confines of marriage.
Therefore, they get off on economic turmoil, or what they THINK will be economic turmoil. Somehow, it’s orgasmic for them.
Silent indicator?
Good grief my friend, it is the thing you are sitting in front of.
Euphoria, greed, the idea that economic cycles never correct, tulips, dot coms, r/e only goes up, trade your day away on Ebay.
FR is the silent indicator my friend. You can also look at money flow, consumer optimism/pessimism, and a million other things. I hate to say this, but the masses are acting insane right now, and they always lose. Greed is making people blind and robbing them of common sense.
Dude, it is “Labor Day” and people think summer can only continue, because as you can see it is 90 degrees, and I got a hell of a sunburn....
My friend, buy a winter coat, before the prices go up. You’ll look really stupid in the parking lot, since it’s 90 degrees out, but you’ll be laughing in a few weeks.
Hey, I hear you. The key is to buy low and sell high, right? Where do you think we are right now, high or low? I would argue that we are going through some pretty extreme market conditions right now, so now’s the time for those with some liquidity to make some money. If you think the American economy still has a long way to fall, stay in your current positions. However, this mortgage mess won’t last forever. Most of the hits have been taken by the big banks this quarter, and they’re all still standing. One quarter of bad earnings may spook the stock market, but it doesn’t tell anyone else much about where the economy’s heading.
The market’s are driven by fear, and what we are seeing is the market reacting to all the bad mortgage news here in the US. But is the underlying strength of the US economy relative to Europe’s really in question? Does anyone really believe that Europe’s huge entitlement obligations and lame work ethic will lead to sustained currency strength? If you believe that, I guess you believe should be racing towards socialism. For all the problems here in the US (and I’m not saying we don’t have them), we at least still have high productivity and a relatively free economy. I believe that is what will win out in the end.
I bought heavily in 2004 and it is nearly double, based on recommendations from my broker. I could care less about 1980. (I just want the brokers here to tell me when to sell, My broker is saying wait)
So, if you've had some gold in a vault for 25 years, you will be even soon.
If you bought a 30 yr treasury in 1982, it would still be paying 14.22% interest.
yitbos
AKA...The “ICU.”
Tip to my wife Hoodlum91 for that one.
My broker friends are telling me to dump China related stocks and are scaling back foreign investments in portfolios by 10% or more. Haven’t heard sells for gold yet....for what that is worth.
Well I of course I think we will get the dollar back I just want to know when to sell my hedge. Calling me a socialist is quite amusing BTW!
Cut through the hype and there’s lots to learn here about hard assets and even Brazil which is a major soybean seller to ChiComs.
Brazil = commodity superpower
Canada = commodity superpower
Australia = commodity superpower
Russia = commodity superpower
http://www.moneyandmarkets.com/
Thanks, my broker is saying early summer 2008.
Expect more IDIOCY from the WSJ not that Rupert Murdoch is in charge. The man is a step up from a pornographer.
Sorry, didn’t mean to imply you were a socialist. That was a general “you”, trying to point out to all those that are wailing that Euro is currently more highly valued than the dollar may not be looking at the long-term issues. Currency markets are just like any other market, and just because something is priced a certain way today says nothing except a lot of speculators and traders are playing short-term trends for profit. But I’m sure you already know this. Forgive my current propensity to lecture. :)
Everyday I just keep checking the exchange rates, hoping that the bleeding will end at least until my trip is over.
That works...I am very comfortable unloading at any time. :^)
Here is why I could not disagree with you anymore.
First, a weaker dollar translates into a cut in the real spending power of American consumers—in effect, a reduction in real income.
Second, a weaker dollar weakens the role of the U.S. dollar as the world’s reserve currency. Why should investors and central banks around the world invest in US assets when their value is steadily declining?
Third, the chances of a weaker dollar leading to a sharp reduction in America’s trade deficit is highly unlikely since 40% of the current balance is due to oil imports that are denominated in U.S. dollars. An additional 20% is due to trade with China, which is, of course, controlling the value of its own currency.
Fourth, a weaker dollar is inflationary since it increases the cost of imports.
Fifth, business leaders know that discounting prices may bump near-term revenue and profits but at a real cost to long-term profitability, not to mention inflicting damage to the brand name. This is what we are doing to the brand of America by trying to increase exports by lowering their price in the global marketplace. Better to stand firm on price and sell into global markets on the basis of what is great about American products: superior quality, innovation and service.
Sixth, investors seem to like a weaker dollar since the profits of American multinationals get a boost from foreign earnings being translated into U.S. dollars. Again this is short-term thinking and vastly overstated since most multinationals have sophisticated treasury departments that hedge currency exposures.
What a weaker dollar really does is to encourage American and international investors to invest in non-American markets. The more the dollar drops, the more global equities rise. Many Asian currencies are hitting record highs against the U.S. dollar.
The Australian dollar has climbed to a 25-year highs, while the Singapore dollar has touched 10-year highs. The Brazilian real, which has jumped 18% in value against the U.S. dollar this year, and the Indian rupee’s sharp appreciation against the U.S. dollar during the past year, have supercharged U.S. dollar investors’ returns in those markets.
According to EPFR Global, investors are pouring money into global funds—with net inflows of $96.94 billion into world equity funds so far in 2007, while taking out $9.6 billion out of U.S. equity funds. Brazil’s local stock exchange, the Bovespa, reported that investors have injected $1.2 billion into the market in September alone.
Foreign investors slashed their holdings of U.S. securities by a record amount as the credit squeeze intensified, according to the U.S. Treasury Department. The Treasury said net sales of U.S. market assets—including bonds, notes and equities—were $69.3 billion in August after a revised inflow of $19.5 billion during July. The August outflow exceeded the previous record decline of $21.2 billion in March 1990
Last and perhaps most importantly, I view a policy of weakening the U.S. dollar to improve America’s competitive position as the path of least resistance.
My view is that the value of a nation’s currency reflects the perceived value of country in the global marketplace. Maintaining and strengthening the value of our nation’s currency is in the best interest of American consumers, businesses and investors.
I’ll give you a one word answer: HUBRIS
Someday you will eat your hubris for breakfast, lunch and dinner.
Regards,
Lurking’
I’ll give you a one word answer: HUBRIS
Someday you will eat your hubris for breakfast, lunch and dinner.
Regards,
Lurking’
:^) LOL
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