Dollar Getting Hammered

Gold and oil are breaking out, the dollar is breaking down, bonds continue to break down, and no one cares! Nobody is worried.  The Dow was up today, although it finished up closer to the lows it was up a lot more earlier in the day although the dollar was getting hammered before the stock market opened and they still bid it up, but the S&P, the NASDAQ and the Russel 2000 all finished in the red, but the losses weren't that big. It's based on the fact that nobody even understands what's going on - what it means.

Bass Ackwards

In fact, they actually got it bass ackwards. You actually have people who think that a weak dollar is good and that rising inflation is a sign of economic growth.  So, there's nothing to worry about! First, let's look at what happened.  Dollar index; that was, I'd say the star of the day - or not the star because it did horrible, do you wouldn't give the dollar a star.  But it was down about 1 full percent. It closed at 89.25 on the dollar index. We cut through 90 like a hot knife through butter.  I think the next stop is a moving average at around 85, and we could be there pretty quickly.  We are headed lower quickly on the dollar.

Mnuchin: "A Weak Dollar is Good for America!"

In fact, one of the things that helped the dollar fall today (I think it would have fallen anyway) was Treasury Secretary Mnuchin's comments that he made to day over at Davos; he's trying to encourage foreigners to invest in America.  So he said, "A weak dollar is good for America, it's good for business, we're open for business, so he said he welcomes the weak dollar. This is supposed to make foreign investors feel better about investing in America? You're telling foreign investors that if you invest in America, you're going to lose, because you're going to lose on the foreign exchange.

Anybody Who Invests in the U.S. Today Will See Losses

My clients know what that feels, because we were investing in foreign stocks during years when foreign currencies were falling against the dollar. So, on paper our accounts were going down.  Anybody who invests in the U.S. today will see losses.  The dollar is going to fall even more.  So right now, the dollar is weak; the last thing you want to do is invest in the United States.  You want to invest in markets where the currencies are strong.

 

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