Posted on 08/12/2015 6:01:38 AM PDT by SeekAndFind
The surge in the greenback has some stock investors screaming foul, but they shouldn't be. Instead, they should embrace the strength.
It is true that the trade-weighted value of the U.S. dollar has climbed more than 21% in the last 13 months, according to recent data from the St. Louis Federal Reserve. It's also true that the rally is taking its toll on the earnings reports of some multinational companies -- their foreign revenues take a hit when translated back into dollars.
Still, there is plenty to feel great about. Here are 10 reasons to smile.
1. It makes imports cheaper. A dollar will now buy at least 21% more imported stuff. That means retailers can buy more knickknacks for the same money and either lower prices to their customers or increase profit margins. Possibly they can do both. Keep a close eye on stocks of retailers that depend on so-called discretionary spending (items or services you don't have to purchase.) The Vanguard Consumer Discretionary (VCR) exchange-traded fund holds a basket of such stocks.
2. It's good for the housing industry. The raw materials for building homes, like copper and lumber, are both traded in dollars. It takes around 400 pounds of copper (for the electrical circuits) and thousands of feet of lumber to make a standard single-family home. A stronger dollar makes these essential materials cheaper. Lumber and copper prices have both slumped recently and the dip should help homebuilders hold down costs. Watch the SPDR S&P Homebuilders (XHB) ETF, which holds a basket of homebuilding companies.
3. It makes oil cheaper. As with copper and lumber, crude oil is priced in dollars. When the dollar is strong, you get more oil for your money. Eventually, as we have seen, the lower price filters through to lower gasoline prices
(Excerpt) Read more at thestreet.com ...
Think how much more value the dollar would represent if the onerous 19 trillion buck debt wasn’t hanging over our heads.
Have Americans forgot about the debt?
Yeah right, I’ll be looking for that 20% decrease in the cost of imports to be passed right along to consumers.
American currency is hot now because global energy isn’t pegged to the other currencies and those other currencies aren’t doing so well, especially China. People are running to the US dollar for the same reason they run to the highest point on a sinking ship. But eventually the whole thing goes under.
This is fine for me as I have significant savings. However, for those in any business selling manufactured goods this is a killer. The cost of products versus imports rise even higher and reduce sales. Reduced sales mean less jobs and the cycle continues. The rich get richer and the middle class and poor get poorer. It is even affecting the upper middle class now.
I live in Thailand and am all for a surging Dollar.
However, I cannot really see a market reason. I don’t see the US Economy outstripping everyone else.
It seems like the comparison in market values is being based on the least corrupt.
I hope this thread will shed some light on my understanding.
Compared to the rest of the world, we are the cleanest dirty shirt in the hamper.
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