Pound Declines 11th Day Versus Dollar, Sliding for Fourth Week By Andrew MacAskill and Kim-Mai Cutler Enlarge Image/Details Aug. 15 (Bloomberg) -- The pound fell for an 11th day against the dollar, the longest run of declines in at least 37 years, on speculation an economic slowdown will spur the Bank of England to reduce interest rates. The U.K. currency was poised for a fourth weekly drop, the... [more]
Pound Declines 11th Day Versus Dollar, Sliding for Fourth Week
By Andrew MacAskill and Kim-Mai Cutler
Enlarge Image/Details
Aug. 15 (Bloomberg) -- The pound fell for an 11th day against the dollar, the longest run of declines in at least 37 years, on speculation an economic slowdown will spur the Bank of England to reduce interest rates.
The U.K. currency was poised for a fourth weekly drop, the most since December, after Bank of England Governor Mervyn King said two days ago there was a ``chill in the economic air'' as unemployment rose in July by the most in almost 16 years. Growth is being hurt as tourism flags and tax receipts fall.
``Already this summer we are seeing the start of what we believe is going to be an aggressive move lower in yields and also the pound as the bearish developments in asset markets and the economy continue to overwhelm,'' a team led by Tom Fitzpatrick, global head of currency strategy in New York at Citigroup Global Markets Inc., wrote in an investor report yesterday.
The pound lost 0.7 percent to $1.8561 as of 7:59 a.m. in London, from $1.8698 yesterday. The streak was the longest since at least January 1971. The currency, poised for a 3.4 percent decline in the week, tumbled 6.4 percent since July 31, sending it to a 22-month low. The pound was at 79.41 pence per euro, from 79.28 pence.
The weakening currency underscores concern a slumping housing market is pushing Europe's second-biggest economy toward a recession. A drop in house prices in July brought the property market to a ``virtual standstill,'' the Royal Institution of Chartered Surveyors said this week. The economy will grow about 0.1 percent on a year-on-year basis in the first quarter of 2009, compared with a previous prediction of 1 percent, according to bank forecasts published two days ago.
Tourism Drops
The number of foreign tourists visiting the U.K. in the second quarter fell as financial concerns affect the economic outlook in other European countries, the Financial Times reported. Visits by overseas residents dropped 5 percent from the previous quarter, seasonally adjusted, and in the year to the end of June visitor numbers declined 3 percent, the FT said, citing Britain's Office for National Statistics.
Merrill Lynch & Co. booked $29 billion of losses from U.S. subprime mortgages and collateralized debt obligations through its U.K. unit, making it unlikely it will pay U.K. taxes for years to come. Most of the losses were recorded this year, including $5 billion from the sale of $30.6 billion in collateralized debt obligations, the New York-based firm said in an Aug. 5 filing with the U.S. Securities and Exchange Commission.
Bonds Decline
Government bonds rose, with the yield on the 10-year gilt falling 3 basis points to 4.61 percent. The price of the 5 percent security due March 2018 rose 0.20, or 2 pounds per 1,000-pound ($1,858) face amount, to 102.99. The yield on the two-year gilt, which is more sensitive to the outlook for interest rates, dropped 2 basis points to 4.54 percent. Bond yields move inversely to prices.
Britain's sputtering economy has already sent the pound below the level at which it's forecast to end 2008. The currency will be worth $1.89 and 80 pence per euro by year-end, according to the median forecast of analysts and strategists surveyed by Bloomberg.
The yield on the 10-year note will end the year at 4.87 percent, according to a separate survey.
The pound fell 6.4 percent versus the dollar this year, after being little changed against the U.S. currency as recently as July 31. It's down 7.4 percent against the euro in 2008.
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It wasn't long ago that the US dollar was ridiculed and labeled the US Peso. Perhaps rumors of its demise were greatly exaggerated..
Who knows but perhaps the next big real estate trend in a year or two may just be American investors investing in properties in the UK & EU as their RE values decline as the USD continues to appreciate. As they say, history does repeat itself.
Major shifts in currency trends are usually quite long in their duration. It doesn't help their currency values that the UK & EU economies are far worse off that ours.
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Response by bugelrex
over 17 years ago
Posts: 499
Member since: Apr 2007
with the pound at 2 yr low, i would expect brits to start dumping there manhattan RE now as buyers from the last 2yrs will be approaching loses now
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Response by faustus
over 17 years ago
Posts: 230
Member since: Nov 2007
bugelrex - you seem to confuse the effect of a strengthening dollar.
It is in fact those foreigners who recently bought who are benefiting. The value of a NYC apartment in their home currency is going UP not down as the dollar strengthens. Foreign buyers from the last 2 yrs are seeing the value of their holdings increase.
The real effect of a strengthening dollar is to make apartments more expensive for foreigners who are thinking of buying now or in the future.
For instance, apartments in NYC just got 7-8% more expensive for Europeans only in the past week or so.
The natural effect will be to dampen foreign demand. Furthermore, a strengthening dollar may be an incentive for Europeans and other foreigners to consider selling and taking profits in their home currency.
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Response by urbandigs
over 17 years ago
Posts: 3629
Member since: Jan 2006
faustus has it right and I am actually working on a piece to discuss this..will be published when I get back from vacation next Thurs/friday
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Response by cherrywood
over 17 years ago
Posts: 273
Member since: Feb 2008
Isn't it also true, though, that foreign owners from countries with weakening currencies will incur higher monthly payments? I would imagine that in some cases some of the higher value of a NYC apartment in their home currencies will be wiped out because of higher monthly expenses (mortgage, common charges, taxes, etc.): it will simpy cost more pounds or euros to meet those monthly carrying costs, no?
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Response by Riv_Drive
over 17 years ago
Posts: 156
Member since: Mar 2007
So will the foreigners start dumping because they've made a nice profit (based on currency alone)?
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Response by newbuyer99
over 17 years ago
Posts: 1231
Member since: Jul 2008
While it's nice to see the dollar strengthen a bit, we have to take it in context. $1.45-1.50 Euro is still damn expensive.
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Response by urbandigs
over 17 years ago
Posts: 3629
Member since: Jan 2006
published the piece early..Faustus you motivated me to complete it. I do NOT think it will result in dumpiong of foreign holdsings, simply on the currency trade alone, because most bought at a lower rate. I mean who bought, closed on US property 2 weeks ago at $1.60 for a EUR, and closed and now will sell today at a better rate? Not realistic. Other factors will determine foreigners choosing to sell like, sdistressed balance sheets, intention of flipping, etc..
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Response by serge07
over 17 years ago
Posts: 334
Member since: Aug 2008
Riv_Drive, I wouldn't think so. The effect of a stronger USD should be mostly confined to slowing foreign investment starting off with the more marginal buyer. If there were to be sales, I suspect it would be more attributable to individual financial circumstances.
Also, their home RE markets are declining in value (some rapidly) which also serves to close the relative value gap.
Dollar goes down = WILL BOOST MANHATTAN REAL ESTATE... foreigners will save us!!!
Dollar goes up = guess what? WILL BOOST MANHATTAN REAL ESTATE.... foreigners will save us!!!
In the end, it doesn't really matter what the Dollar does since either way, the foreigner will save us.
Loving it.
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Response by nyfineman
over 17 years ago
Posts: 59
Member since: Mar 2007
Steve-
Just noticed a number of hits on my blog (afineblog)from streeteasy, and noticed that they were from this board. Just checking in.
I have had several foreign investors on the sidelines since the Bear debacle in mid-March. They feared that the dollar would get even cheaper and were looking for some sort of a bottom before hunting again. From the action of the past few weeks, a bottom may be in place. From my perspective there may be a surge in interest from foreign buyers looking to make money both on capital appreciation and on dollar appreciation. Just a theory. Time will tell.
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Response by EddieWilson
over 17 years ago
Posts: 1112
Member since: Feb 2008
> In the end, it doesn't really matter what the Dollar does since either way, the
> foreigner will save us
Thank god for those Irish carpenters...
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Response by steveF
over 17 years ago
Posts: 2319
Member since: Mar 2008
nyfineman...thanks for the insight...can you keep us updated on your investors actions??
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Response by urbandigs
over 17 years ago
Posts: 3629
Member since: Jan 2006
the reason why foreigners likely will be less inclined to buy US assets as our currency rises against theirs, lies in where the investor calls home. Since we call them foreigners, lets assume they reside in Europe; for sake of the EUR/$ discussion here.
The slowdown has now reached their home, media is all over it, blogs are all over it, markets are likely to start their downturn, psychology changes for negative, confidence at home declines, wealth effect at home declines, and that is hardly an environment to go put your money to work in the US because the dollar seemed to start rallying. The opposite is true, as the dollar loses value against their stronger local currency, their economy is seen to be growing, so they are more risky on buying foreign assets 'on the cheap'.
Its psychology that I am questioning here. Locals are likely to tighten their belts at home (Europe), as the slowdown hits there, and less likely to put money to work in a foreign market simply because they can gain on the currency strength. I think it diminishes new investment and down the road, if the currency trend continues, will likely incentivize foreigners who purchased already to sell and take any gains on the currency trend that they may have had.
Key here is local confidence.
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Response by buster2056
over 17 years ago
Posts: 866
Member since: Sep 2007
No, no - my line is flooded with foreigners who want to buy, and I'm not even a real estate agent - just some dude with an NYC area code. Italians email me Italians who want to buy NYC real estate.
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Response by serge07
over 17 years ago
Posts: 334
Member since: Aug 2008
steveF, I hope that article proves to be on the correct side of the equation. One should take into account that the author is a realtor.
The Irish investors singled out in article may have to look outside of their home country to obtain financing. Their banking, real estate and equity markets have certainly seen better days. We are not the only country on the planet adjusting to the current banking/financial problems, far from it.
BTW, investors for the most part would be interested in commercial or investment properties with an acceptable rate of return. I'm not familiar with sophisticated investors that would prefer to pay more to less specially when commercial (and residential) leasing rates are under pressure & financing costs are escalating.
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Response by nyfineman
over 17 years ago
Posts: 59
Member since: Mar 2007
It's a great debate.
Digs, you have a point, but the foreigners who are buying here have some serious assets. The majority of Europeans do not buy NYC real estate- the really wealthy ones do. The wealthy tend to have gotten wealthy by putting capital in places that have a good chance of appreciation. If the euro economies are stalling and they have more faith in the US, they will be more inclined to invest in dollar denominated investments.
But, there are 2 sides to every story, and a huge move in the dollar would be counter-productive.
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Response by serge07
over 17 years ago
Posts: 334
Member since: Aug 2008
One point that hasn't been made is that a strong US dollar IS terrific for Americans and the US economy. All major commodities are US dollar denominated and as the US currency improves, our costs can decline substantially. One only has to look at the rapid corresponding declines in the prices of crude oil, gasoline, heating oil, natural gas, copper, gold, platinum, steel and certain food commodities to see the benefits. It may actually help save Ford & General Motors.
As we import approx. 70& of our crude oil consumption, the recent sharp decline will materially lower our trade imbalances, reduce inflationary pressures which further produces a positive background for a healthy USD. The value of our savings improves with these recent developments. It is certainly not all bad news here.
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Response by EddieWilson
over 17 years ago
Posts: 1112
Member since: Feb 2008
> Digs, you have a point, but the foreigners who are buying here have some serious assets. The
> majority of Europeans do not buy NYC real estate- the really wealthy ones do. The wealthy tend to
> have gotten wealthy by putting capital in places that have a good chance of appreciation.
Funny, I've heard similar rationalizations about Wall Street folk. They have so much set aside, the difference between making $1.2 and $1 mil won't matter, bla bla bla.
In reality, even foreign wealth is seeing substantial declines, whether invested here or in their home countries. Stock markets and real estates are down around the world with few exceptions. They have plenty of places to put capital, but if they're all doing badly, why does that matter...
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Response by nyfineman
over 17 years ago
Posts: 59
Member since: Mar 2007
Eddie-
Just like in the US, there are haves and have nots around the globe. That's why 15 CPW is setting records while the $400k house in Eastern Queens is going into foreclosure. Foreigners who buy here have some serious assets and are not representative of your average European or Chinese, etc... The rich get richer. If the NYC is providing the best potential for return, the money will find it's way here.
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Response by JuiceMan
over 17 years ago
Posts: 3578
Member since: Aug 2007
serge07, well said. I find it funny that the same people that were predicting apocalypse because of a weak dollar are the same people predicting apocalypse for a strong one.
MMAfia, is your argument that foreign money has nothing to do with NYC real estate or do you just enjoy posting the same thing over and over?
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Response by EddieWilson
over 17 years ago
Posts: 1112
Member since: Feb 2008
"That's why 15 CPW is setting records while the $400k house in Eastern Queens is going into foreclosure"
Hey, if you bought at 15 CPW or the Plaza, you might have a case. For the rest of Manhattan, thats an *awful* stretch.
> I find it funny that the same people that were predicting apocalypse because
> of a weak dollar are the same people predicting apocalypse for a strong one.
That would be interesting... if it weren't a load of crap.
No one was predicting a Manhattan the crash because of a weak dollar, it was predicted because of 1) a bubble about to pop and 2) serious potential blows to Wall Street. Both have occured in spades... by many measures, the worst in history for each (record declines in prices and sales for the former, and record losses on the latter).
That being said, the weak dollar was used a TON by bulls claiming it would lead to more foreign investment. Now that thats gone, the logic has been flipped.
Add that to "Wall Street will save NYC" last year, and now "Wall Street has nothing to do with it".
The awful rationalization has come from the bulls, not the bears.
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Response by faustus
over 17 years ago
Posts: 230
Member since: Nov 2007
"I find it funny that the same people that were predicting apocalypse because of a weak dollar are the same people predicting apocalypse for a strong one."
Juiceman, please clarify.
Who was predicting apocalypse because of a weak dollar, and what specifically do you mean by 'apocalypse'?
Some references to previous posts would also be helpful. Just trying to understand.
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Response by serge07
over 17 years ago
Posts: 334
Member since: Aug 2008
Thanks, JuiceMan! :)
I've become considerably more positive on the US equity markets as a result of this. All those US based fund flows that have fled to the emerging & European markets in the past several years, may just start to find their way back home. I don't think we'll have too many folks bitching if our financial markets begin to stabilize and actually strengthen for a change.
As UD stated above, it's all about confidence.
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Response by faustus
over 17 years ago
Posts: 230
Member since: Nov 2007
Juiceman - just to clarify - who is predicting apocalypse because of a STRONG dollar? Weak I can understand, but a strong dollar is fun for the whole family, in my opinion. It just may not be good for NYC real estate.
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Response by lowery
over 17 years ago
Posts: 1415
Member since: Mar 2008
Is everyone sure that people who buy dollar denominated assets are counting their $-assets' returns in their home countries' currencies?
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Response by EddieWilson
over 17 years ago
Posts: 1112
Member since: Feb 2008
> As we import approx. 70& of our crude oil consumption, the recent sharp decline will materially
> lower our trade imbalances,
Uh, when the dollar is stronger, folks buy *less* of our stuff, and we buy more of theirs. Thats what you call REALLY BAD for trade balance....
to which JuiceMan responded: "serge07, well said"
Yeah, that really wasn't the bandwagon you wanted to jump on... But then again, the hypocrisy that followed pretty much wiped out any credibility you had...
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Response by serge07
over 17 years ago
Posts: 334
Member since: Aug 2008
> As we import approx. 70& of our crude oil consumption, the recent sharp decline will materially
> lower our trade imbalances,
Uh, when the dollar is stronger, folks buy *less* of our stuff, and we buy more of theirs. Thats what you call REALLY BAD for trade balance...."
EW, I respectfully disagree. The US exports are mainly high tech products, aircraft & intellectual property which we are darn good at innovating & manufacturing. Furthermore, our major corporations/exporters have their manufacturing facilities diversified throughout the planet which is a natural protection against significant currency fluctuations. What may occur is that profitability can be somewhat diminished as foreign profits are translated into a stronger US currency for reporting purposes. However, any negative currency translation will be more than offset by the significant decline in raw input costs as those I mentioned above. Just ask GM, Ford, Boeing, Cat, Procter, Coke, Nike, Dell or any other American manufacturer is this isn't a massive shot in the arm & will improve their competive position of their cost structures.
The highest risk to our exports is the fact that the economies of the EU, UK & Japan are in recessionary territory not a stronger USD. Expect the EU & UK to start cutting their 4.5% plus fed funds equivalent in short order which I suspect, will further benefit the USD.
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with the pound at 2 yr low, i would expect brits to start dumping there manhattan RE now as buyers from the last 2yrs will be approaching loses now
bugelrex - you seem to confuse the effect of a strengthening dollar.
It is in fact those foreigners who recently bought who are benefiting. The value of a NYC apartment in their home currency is going UP not down as the dollar strengthens. Foreign buyers from the last 2 yrs are seeing the value of their holdings increase.
The real effect of a strengthening dollar is to make apartments more expensive for foreigners who are thinking of buying now or in the future.
For instance, apartments in NYC just got 7-8% more expensive for Europeans only in the past week or so.
The natural effect will be to dampen foreign demand. Furthermore, a strengthening dollar may be an incentive for Europeans and other foreigners to consider selling and taking profits in their home currency.
faustus has it right and I am actually working on a piece to discuss this..will be published when I get back from vacation next Thurs/friday
Isn't it also true, though, that foreign owners from countries with weakening currencies will incur higher monthly payments? I would imagine that in some cases some of the higher value of a NYC apartment in their home currencies will be wiped out because of higher monthly expenses (mortgage, common charges, taxes, etc.): it will simpy cost more pounds or euros to meet those monthly carrying costs, no?
So will the foreigners start dumping because they've made a nice profit (based on currency alone)?
While it's nice to see the dollar strengthen a bit, we have to take it in context. $1.45-1.50 Euro is still damn expensive.
published the piece early..Faustus you motivated me to complete it. I do NOT think it will result in dumpiong of foreign holdsings, simply on the currency trade alone, because most bought at a lower rate. I mean who bought, closed on US property 2 weeks ago at $1.60 for a EUR, and closed and now will sell today at a better rate? Not realistic. Other factors will determine foreigners choosing to sell like, sdistressed balance sheets, intention of flipping, etc..
Riv_Drive, I wouldn't think so. The effect of a stronger USD should be mostly confined to slowing foreign investment starting off with the more marginal buyer. If there were to be sales, I suspect it would be more attributable to individual financial circumstances.
Also, their home RE markets are declining in value (some rapidly) which also serves to close the relative value gap.
http://afinecompany.blogspot.com/2008/08/will-dollar-rally-boost-manhattan-real.html
Steve F,
Dollar goes down = WILL BOOST MANHATTAN REAL ESTATE... foreigners will save us!!!
Dollar goes up = guess what? WILL BOOST MANHATTAN REAL ESTATE.... foreigners will save us!!!
In the end, it doesn't really matter what the Dollar does since either way, the foreigner will save us.
Loving it.
Steve-
Just noticed a number of hits on my blog (afineblog)from streeteasy, and noticed that they were from this board. Just checking in.
I have had several foreign investors on the sidelines since the Bear debacle in mid-March. They feared that the dollar would get even cheaper and were looking for some sort of a bottom before hunting again. From the action of the past few weeks, a bottom may be in place. From my perspective there may be a surge in interest from foreign buyers looking to make money both on capital appreciation and on dollar appreciation. Just a theory. Time will tell.
> In the end, it doesn't really matter what the Dollar does since either way, the
> foreigner will save us
Thank god for those Irish carpenters...
nyfineman...thanks for the insight...can you keep us updated on your investors actions??
the reason why foreigners likely will be less inclined to buy US assets as our currency rises against theirs, lies in where the investor calls home. Since we call them foreigners, lets assume they reside in Europe; for sake of the EUR/$ discussion here.
The slowdown has now reached their home, media is all over it, blogs are all over it, markets are likely to start their downturn, psychology changes for negative, confidence at home declines, wealth effect at home declines, and that is hardly an environment to go put your money to work in the US because the dollar seemed to start rallying. The opposite is true, as the dollar loses value against their stronger local currency, their economy is seen to be growing, so they are more risky on buying foreign assets 'on the cheap'.
Its psychology that I am questioning here. Locals are likely to tighten their belts at home (Europe), as the slowdown hits there, and less likely to put money to work in a foreign market simply because they can gain on the currency strength. I think it diminishes new investment and down the road, if the currency trend continues, will likely incentivize foreigners who purchased already to sell and take any gains on the currency trend that they may have had.
Key here is local confidence.
No, no - my line is flooded with foreigners who want to buy, and I'm not even a real estate agent - just some dude with an NYC area code. Italians email me Italians who want to buy NYC real estate.
steveF, I hope that article proves to be on the correct side of the equation. One should take into account that the author is a realtor.
The Irish investors singled out in article may have to look outside of their home country to obtain financing. Their banking, real estate and equity markets have certainly seen better days. We are not the only country on the planet adjusting to the current banking/financial problems, far from it.
BTW, investors for the most part would be interested in commercial or investment properties with an acceptable rate of return. I'm not familiar with sophisticated investors that would prefer to pay more to less specially when commercial (and residential) leasing rates are under pressure & financing costs are escalating.
It's a great debate.
Digs, you have a point, but the foreigners who are buying here have some serious assets. The majority of Europeans do not buy NYC real estate- the really wealthy ones do. The wealthy tend to have gotten wealthy by putting capital in places that have a good chance of appreciation. If the euro economies are stalling and they have more faith in the US, they will be more inclined to invest in dollar denominated investments.
But, there are 2 sides to every story, and a huge move in the dollar would be counter-productive.
One point that hasn't been made is that a strong US dollar IS terrific for Americans and the US economy. All major commodities are US dollar denominated and as the US currency improves, our costs can decline substantially. One only has to look at the rapid corresponding declines in the prices of crude oil, gasoline, heating oil, natural gas, copper, gold, platinum, steel and certain food commodities to see the benefits. It may actually help save Ford & General Motors.
As we import approx. 70& of our crude oil consumption, the recent sharp decline will materially lower our trade imbalances, reduce inflationary pressures which further produces a positive background for a healthy USD. The value of our savings improves with these recent developments. It is certainly not all bad news here.
> Digs, you have a point, but the foreigners who are buying here have some serious assets. The
> majority of Europeans do not buy NYC real estate- the really wealthy ones do. The wealthy tend to
> have gotten wealthy by putting capital in places that have a good chance of appreciation.
Funny, I've heard similar rationalizations about Wall Street folk. They have so much set aside, the difference between making $1.2 and $1 mil won't matter, bla bla bla.
In reality, even foreign wealth is seeing substantial declines, whether invested here or in their home countries. Stock markets and real estates are down around the world with few exceptions. They have plenty of places to put capital, but if they're all doing badly, why does that matter...
Eddie-
Just like in the US, there are haves and have nots around the globe. That's why 15 CPW is setting records while the $400k house in Eastern Queens is going into foreclosure. Foreigners who buy here have some serious assets and are not representative of your average European or Chinese, etc... The rich get richer. If the NYC is providing the best potential for return, the money will find it's way here.
serge07, well said. I find it funny that the same people that were predicting apocalypse because of a weak dollar are the same people predicting apocalypse for a strong one.
MMAfia, is your argument that foreign money has nothing to do with NYC real estate or do you just enjoy posting the same thing over and over?
"That's why 15 CPW is setting records while the $400k house in Eastern Queens is going into foreclosure"
Hey, if you bought at 15 CPW or the Plaza, you might have a case. For the rest of Manhattan, thats an *awful* stretch.
> I find it funny that the same people that were predicting apocalypse because
> of a weak dollar are the same people predicting apocalypse for a strong one.
That would be interesting... if it weren't a load of crap.
No one was predicting a Manhattan the crash because of a weak dollar, it was predicted because of 1) a bubble about to pop and 2) serious potential blows to Wall Street. Both have occured in spades... by many measures, the worst in history for each (record declines in prices and sales for the former, and record losses on the latter).
That being said, the weak dollar was used a TON by bulls claiming it would lead to more foreign investment. Now that thats gone, the logic has been flipped.
Add that to "Wall Street will save NYC" last year, and now "Wall Street has nothing to do with it".
The awful rationalization has come from the bulls, not the bears.
"I find it funny that the same people that were predicting apocalypse because of a weak dollar are the same people predicting apocalypse for a strong one."
Juiceman, please clarify.
Who was predicting apocalypse because of a weak dollar, and what specifically do you mean by 'apocalypse'?
Some references to previous posts would also be helpful. Just trying to understand.
Thanks, JuiceMan! :)
I've become considerably more positive on the US equity markets as a result of this. All those US based fund flows that have fled to the emerging & European markets in the past several years, may just start to find their way back home. I don't think we'll have too many folks bitching if our financial markets begin to stabilize and actually strengthen for a change.
As UD stated above, it's all about confidence.
Juiceman - just to clarify - who is predicting apocalypse because of a STRONG dollar? Weak I can understand, but a strong dollar is fun for the whole family, in my opinion. It just may not be good for NYC real estate.
Is everyone sure that people who buy dollar denominated assets are counting their $-assets' returns in their home countries' currencies?
> As we import approx. 70& of our crude oil consumption, the recent sharp decline will materially
> lower our trade imbalances,
Uh, when the dollar is stronger, folks buy *less* of our stuff, and we buy more of theirs. Thats what you call REALLY BAD for trade balance....
to which JuiceMan responded: "serge07, well said"
Yeah, that really wasn't the bandwagon you wanted to jump on... But then again, the hypocrisy that followed pretty much wiped out any credibility you had...
> As we import approx. 70& of our crude oil consumption, the recent sharp decline will materially
> lower our trade imbalances,
Uh, when the dollar is stronger, folks buy *less* of our stuff, and we buy more of theirs. Thats what you call REALLY BAD for trade balance...."
EW, I respectfully disagree. The US exports are mainly high tech products, aircraft & intellectual property which we are darn good at innovating & manufacturing. Furthermore, our major corporations/exporters have their manufacturing facilities diversified throughout the planet which is a natural protection against significant currency fluctuations. What may occur is that profitability can be somewhat diminished as foreign profits are translated into a stronger US currency for reporting purposes. However, any negative currency translation will be more than offset by the significant decline in raw input costs as those I mentioned above. Just ask GM, Ford, Boeing, Cat, Procter, Coke, Nike, Dell or any other American manufacturer is this isn't a massive shot in the arm & will improve their competive position of their cost structures.
The highest risk to our exports is the fact that the economies of the EU, UK & Japan are in recessionary territory not a stronger USD. Expect the EU & UK to start cutting their 4.5% plus fed funds equivalent in short order which I suspect, will further benefit the USD.