The dollar is crushing other currencies



In the global currency cage match, the dollar is as unstoppable as undefeated UFC champ Ronda Rousey.


The greenback is trading at a 12-year high against the euro and 8-year high versus the Japanese yen.


This strength is, in many respects, a sign that the economy in the United States is much healthier than Europe, Japan and many other parts of the world.


It is great news for Americans looking to travel overseas anytime soon. It's possible that the euro could reach parity with the dollar in the not-so-distant future. One euro is currently worth about $1.07.


The surging dollar also helps make the price of imported goods cheaper in the U.S. Looking for a Japanese car or handbag from Italy? Now might be a good time to start shopping.


But investors are taking the opposite approach to the strong dollar. They are selling stocks as fast as they can. The market was tanking on Tuesday.


Why are traders so worried about the bounce in the Benjamins? There are two key reasons.


Big American firms that generate a big chunk of sales abroad are likely to get hit when they report their quarterly results. Revenue from their international units will wind up looking weaker when they get translated back into American dollars.


Microsoft (MSFT, Tech30), IBM (IBM, Tech30), Procter & Gamble (PG), Johnson & Johnson (JNJ) and Caterpillar (CAT) are just a few of the many blue chip U.S. firms that have already warned about what a stronger dollar will do to their sales and profits this year.


Still, this is the least of their concerns. The impact of fluctuating foreign exchange rates can be hedged by savvy financial departments. But the moves in currencies are not just a headache for a company's accounting and financial departments.


It's hard to hedge against cheaper prices. Remember that the strong dollar also makes the prices of products made by non-American firms look more attractive.


That works in the United States and in foreign markets. Companies like GM (GM) and Ford (F) may find it tougher to compete with European carmakers on their home turf if the dollar continues to rally against the euro. Hershey (HSY) has been hit hard due to the stronger dollar as well as international sales of its candy have fallen.


The stronger dollar is one reason why Katie Nixon, chief investment officer for wealth management at Northern Trust, thinks that earnings for the S&P 500 will increase by only 3% this year.

强势美元也是 北方信托高级投资财富管理人员凯蒂尼克松认为史坦普500股价格指数今年只可能增长3% 的一个原因。

"The speed of the change in the value of the dollar has surprised many multinationals," she said. "The impact on the competitive side is harder to hedge."


How much worse can it get? The dollar has already gained nearly 13% versus the euro this year.



But the dollar could appreciate even further now that the European Central Bank is finally buying bonds through a quantitative easing program while the Federal Reserve seems poised to raise interest rates later this summer.


Focus on companies with little foreign exposure. Simply put, higher rates should lead to a stronger currency.


That's why George Young, co-manager of the Villere Balanced and Villere Equity mutual funds, said that one way for investors to protect themselves from the strong dollar is to look for smaller companies that don't depend as much on international markets for growth.

这就是为什么乔治·杨格(Villere Balanced和Villere Equity互助基金的共同经理人)说,投资者在强美元下保护自己的一个方法是,寻找那些依赖海外市场较少的小公司。

Some of the fund's top picks are furniture and bedding supplies manufacturer Leggett & Platt (LEG) and Financial Engines (FNGN), a company that provides investment advice to workers with 401(k) retirement plans.


"We own mostly domestic companies. So foreign currency changes are not an issue," he said.


That strategy may do well for a while if the dollar continues to put the euro, yen and other currencies in an armbar like Rousey does to her helpless opponents.



McRight52 15 hours ago

further proof we are the best


InfoSphere 15 hours ago

@McRight52 I don't know about that. A dollar used to be worth approximately 33 times as much back in the days of our Founders.



MLeRoy 15 hours ago

@InfoSphere @McRight52 Back in the days of our Founders, could you buy a Blu-Ray player, a big-screen TV, a smart-phone, or an airline flight across the Atlantic, with those dollars?

@InfoSphere @McRight52 建国时,你能买蓝光播放机吗?能买家庭影院吗?能买智能手机吗?能买横跨大西洋的机票吗? 就用那些建国时的美元?

InfoSphere 15 hours ago

@MLeRoy @InfoSphere @McRight52 No, but you could get a good old fashioned horse flogging for a half disme! In all seriousness inflation is separate from the kinds of things you can buy.

@MLeRoy @InfoSphere @McRight52 不能买,但是,你可以只花半毛钱就买一个很讲究的老式马鞭!如果不考虑通过膨胀的话。

MLeRoy 14 hours ago

@InfoSphere @MLeRoy @McRight52 "In all seriousness inflation is separate from the kinds of things you can buy."

Yes, it is. But the kinds of things you can buy, and the standard of living you can maintain, is what really matters, and is FAR more important than how fast prices are going up. Just speaking for myself, I would much rather live in a very prosperous country with a bit of inflation, than to live in some dirt-poor country with perfect price stability.

But maybe you differ.

@InfoSphere @MLeRoy @McRight52 “如果不考虑通货膨胀的话。”



InfoSphere 14 hours ago

@MLeRoy @InfoSphere @McRight52 I'm pretty sure it takes more than a little price inflation to elevate standard of living. Access to a plethora of natural resources and the means to extract them is a good start.

@MLeRoy @InfoSphere @McRight52 我很确定,有少量通货膨胀来提振自己的生活水平。临近丰富的自然资源,意味着我可以开采他们,一个好的开端

MLeRoy 14 hours ago

@InfoSphere @MLeRoy @McRight52 And America DOES have access to a plethora of natural resources. In addition, we have the most technologically dynamic economy in the world, with many of the world's most important technology companies, such as Apple, Intel, Microsoft, Google, Facebook, IBM, HP, Tesla, and etc., and etc. We also have MOST of the world's best universities, with 27 of the top 30 universities in the world being located right here in the good old U.S. of A.

@InfoSphere @MLeRoy @McRight52 美国就有很多自然资源。同时,我们也是世界上最发达的经济体,拥有很多世界上最大最重要的技术公司,比如苹果,英特尔,微软,谷歌,非死不可,IBM,惠普,特斯拉,等等,等等。 我们也有世界上最好的大学,世界30强大学中,在我们这个又老又旧的美国中,有27个。

Democant2016 15 hours ago

@MLeRoy @InfoSphere @McRight52

Look, a comment trying to distract from the actual discussion...

@MLeRoy @InfoSphere @McRight52

看, 有人正在转移话题。

MLeRoy 15 hours ago

@Democant2016 @MLeRoy @InfoSphere @McRight52 It's hardly irrelevant. The standard of living is what matters, at least to most sensible people, rather than the price level.

@Democant2016 @MLeRoy @InfoSphere @McRight52 无意义的讨论。 生活水平最重要,至少对正常人来说,比物价重要。

Jorge Gomez 15 hours ago

@MLeRoy @InfoSphere @McRight52 You could buy slaves. Can you buy slaves now?

@MLeRoy @InfoSphere @McRight52 那时你能买奴隶。 现在你能买奴隶吗?

MLeRoy 15 hours ago

@Jorge Gomez @MLeRoy @InfoSphere @McRight52 Well, if it's a female slave you want, there is still quite a bit of trafficking in women going on, including right here in the United States.

@Jorge Gomez @MLeRoy @InfoSphere @McRight52 喔,如果是美女奴隶,我想要。今天依然有很多人口贩子在贩卖女性,包括美国在内。

McRight52 15 hours ago

@InfoSphere @McRight52 compared to what currency?

@InfoSphere @McRight52


InfoSphere 15 hours ago

@McRight52 @InfoSphere Compared to itself. And since a 1774 dollar was defined by the silver content, I guess the answer is silver. If you compare that to the price of silver today, the disparity is something like 15X. A modern silver dollar would be a bit smaller than a dime.

@McRight52 @InfoSphere


McRight52 15 hours ago

@InfoSphere @McRight52 then that is irrelevant to my post

@InfoSphere @McRight52


gsaogb 15 hours ago

Thank you Obama.


lax1 15 hours ago

Big deal. Short term rates in the USA are still almost zero. Not much "strength" there.


McRight52 15 hours ago

@lax1 its strengthening against OTHER currencies



Glenn Doty 15 hours ago


McRight is correct, it's surging against all other currencies that are not pegged to the dollar - including non-fiat currencies like precious metals, bitcoin, oil, etc...




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