Category: Economy

Unless you are an American that travels abroad frequently, the state of the dollar isn’t something you give much thought.  However, the dollar will start garnering more of your attention if there are more weeks like the past one.  Last week the dollar lost 3%, 2.2%, 2% and 1.8% versus the Swiss franc, euro, British pound and Japanese yen respectivelly.  These are large moves in the currency market. 

Wal-Mart was one of the worst performing retailers on “Black Friday.”  A weakening dollar means higher import prices.   That is the last thing Wal-mart can afford now. As commodity investors, just remember that the dollar and gold have an inverse relationship. So, a weakening dollar means a strengthening gold price.  Gold was true to the trend – returning 4.71% last week on the spot market. Continue reading “The U.S. Dollar is the Week’s Biggest Turkey”

Just when I was starting to feel good about the potential for gridlock Peter Schiff throws a money wrench into the situation.  Many of the pundits have been saying that gridlock is good and will prevent Washington from passing any legislation that will adversely affect the markets.  Thus, giving Wall Street one less thing to worry about.  However, Schiff sees it differently. 

Peter is concerned that we may face bi-partisan cooperation.  How could cooperation be a bad? His position is “that the most likely result of both parties “working together” is Democratic support of Republican pork, in exchange for Republican support of Democratic pork, which will wreak further havoc on the country’s already dismal balance sheet. In addition, grandiose and ill conceived pet programs on both sides have much better chances of actually being passed. The last thing we need is Democrats and Republicans actually working together.”

Wow, I would not have thought that cooperation could be bad.  I need to think that through some more.

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Sometimes I wonder why I bother watching CNBC.  I think that some of the guest believe that if they say something negative about anything – they will not be invited back.  Two of my favorite guests are Peter Schiff and Nouriel Roubini.  You can read Peter’s latest commentary at the link below.  Roubini is a professor of economics at New York University. I knew that Larry Kudlow would invite him on the show after the latest GDP release.  Kudlow and all of his buddies were laughing at Roubini a few days ago when he projected that GDP would be around 1.5% for the quarter.  It came in at 1.6% – the slowest growth since first quarter 2003 and below the consensus of 2.0%.

Roubini forecasted 0.5% for the next quarterly release and once again they all laughed in disbelief.  It doesn’t take a PhD in economics to realize that the slow down in real estate has and will hurt many people.  Compare the size of your raises from the past five years with the ones of the previous five year period.  Most will attest that wages are not increasing.  Lifestyles have been maintained primarily by equity out refinancing.  Unfortunately, the real estate slow down has turned off the home ATM spigot.

Don’t believe the hype.  Prepare yourself for the road ahead.  Companies are holding their highest levels of cash in history.  If the economy was so great – wouldn’t they be finding opportunities to invest their war chests.  There are two ways that you can prepare yourself.  Either save now and invest later or invest now and invest more later.   If you choose the former, learn as much as possible about real estate investing.  Cash rich investors will have their pick of the litter in a few years.  If you choose the latter, commodities are the place to be.  There are many articles on this site on that topic.

Denial Is Not Just a River in Egypt

Every good investor needs to be cognizant of interest rates and its direction.  Today, the Fed held rates at 5.25% and issued a statement that will keep the markets guessing as to whether the next move is up or down.

Here is a pretty good article from the New York Times that discusses the statement accompanying the Fed’s decision. 

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