A short course in how to be an international banker is on tap today. Although it would be wonderful to announce that science has experienced a breakthrough and we’re all immediately destined for a world without want, instant gratification and fulfillment, where calories don’t count, and such. Regrettably, that’s not on the breakfast menu. Try back at lunch.
Instead, we have nearly the same spreads as going into the Santa Week, except the Santa Rally is possibly over and we will get back into the swing of hard numbers tomorrow. From there the week moves to the ADP and Challenger foreplay job numbers ahead of Friday’s big deal, the “offishul” government employment report.
For now, the futures are up modestly in US markets, but we wouldn’t be surprised to see a weak ending to the day. It’s a foregone conclusion the Big Traders may try this month to drive down prices in order to buy on the cheap for bonus calculations for the year.
The dollar is on the move, though, and it’s worth a mention: When the dollar weakens, it takes move weak dollars to “buy the Dow.”
Naturally, to the Great Unwashed it looks like a rally. But, alas, it’s a simple change of inter-market arbitrage sorely missed by average investors.
The tip-off as to whether a move in the futures is driven by FOREX changes may be found in the price of metals. They go UP (generally) as the purchasing power of the buck craters.
Think of it this way: If you were going to buy an ounce of gold for $100, but suddenly the purchasing power of the dollar were halved, the seller of the gold would demand twice as much paper – $200 – to do the deal.
By the way, if you find someone who will sell gold coins for $100, I’d like to talk to them…
Same thing happens with other hard commodities: Oil was up a few cents, too. Notice, though, that this is noisy business. Nothing goes straight up, down, or sideways.
The long-term USD move is still underway against the Euro. As of this morning, a buck only buys about 0.83 Euro. Last fall, when readers were asking me to comment on the “strengthening dollar” (and I was pretty quiet) it was because what we’re really seeing is a game between Central Banks.
Although you have to look around for the numbers, the US is still in deflation. This is why gold is not somewhere north of $2,500 an ounce and why silver languishes around $17. Last year, the stronger dollar would buy almost a whole Euro (or at least 0.95 Euro) so percentage-wise, it could be said that the dollar is down 14% relative to the Euro.
But it’s likely not to last too long. Perhaps a few more months. At the longer timeline, if you click over to Xe and click the 10-year, you will see that once upon a time it took $1.40 to buy a Euro. Now, it’s on the order of $1.20.
As a RICH American tourist (which you aspire to be, anyway) the most ‘bang for you buck’ would have been visiting Europe early in 2015, or late in 2016 when the dollar was strongest against the Euro. Compared to those windows, the costs are likely up (denominated in dollars) by 10-15%.
Point is? If you like things made in Europe, start thinking of items from elsewhere – at least for now. And if you think the study of comparative exchange rates is for dorks and nerds, you’d be sadly mistaken.
A lot of people don’t understand how to make pretty good money by simply saving in a foreign bank.
Take Canada, for example. Say you invested $10,000 in Canada when a Dollar would by $1.45 CA in 2015. A Canadian passbook would show $14,500 at that point.
Fast-forward to this morning at the Looney is about $1.26. If you were to move the money out of Canada and back to the US today, you would get about $11,507 in US dollars.
Now think about this: A (very roughly) 15% gain in what, 2-1/2 years? And with fairly small risk. Oh, and that’s just using a foreign bank – we’re not talking interest. Royal Bank of Canada pays about what Bank of America pays (as of this morning): 0.75% which doesn’t even keep up with inflation.
But, like I said, people don’t ask the easy questions much these days, like “WIIFM?” (What’s in it for me?”
If you do use a foreign bank this way, don’t forget to check the little box on your IRS returns if you have $10,000 (*usd) overseas. Consider thing quadruple-important if you have anything other than an Anglo surname.
Sometimes, you can make pretty good money putting up a “spec house” in a hot market. I mention this because CoreLogic Reports Fourth Consecutive Month with More Than 6 Percent Year-Over-Year Home Price Growth in November. With housing kicking-it in some markets, there’s another way to play. All depends on how muchg confidence you have in your ability to organize and put up a home in 120 days, doesn’t it?
Didn’t mean to roll out the white board and start our usual scheming to make a buck this early in the new year, but we have to get to it sometime. Getting ahead, where your savings keep ahead of inflation, is as much a problem now as it was last week.
Some things never change.
One New Year housekeeping issue: If you don’t have it yet, quickly flip overs to Amazon for your copy of the Stock Trader’s Almanac 2018. There are key dates all overs the place. We prefer the spiral-bound to the e-version.
Things like the FOMC minutes tomorrow afternoon – that might move things along. But for now, as a variant of SSDD (same sh*t, different day) we are in SSDY this morning, though you’d be hard-pressed to tell.
Macro Trend Warning
I wouldn’t be planning a roll-up of truck driving schools any time soon….
Also have a gander at Enterprise Virtual Digital Assistant Users to Surpass 1 Billion by 2025, According to Tractica. (“You mean those ‘chat now people’ aren’t people?” D’uh….)
Revolutions are Good for Prices?
You might draw that conclusion after reading Oil trades near strongest levels since mid-2015 on Iranian unrest.
Someone should put together a daily “death index” which would include arms makers and the defense sector. Oh, wait…guess that would be irreverent, huh?
Meantime, Ayatollah Khamenei Blames Protests on ‘Enemies of Iran’ as 9 Are Killed in Latest Unrest… Care to guess who that might include?
Real-Life Flying Adventure
F-16s intercept small plane that violated Trump’s airspace. How’d you like that for an experience…out for a holiday sight-seeing and suddenly there’s F-16’s on you.
About the only thing scarier will be the FAA fines…after alll, preflight checks are supposed to include checks for TFR’s (temporary flight restrictions). Big oopy….
Climate Change to End Chocolate?
Chocolate could run out within 30 years because of climate change… at least so claims the story.
As we’ve long held, climate change is from desertification and that’s from killing off large wild herds and animals and have you any frigging idea how stupid most people are on this point? Go watch this TED-Talk video. Or, better, go get the book Holistic Management, Third Edition: A Commonsense Revolution to Restore Our Environment.
These are the real-deal answers, not the socio-political SJW globalist-scrambled thinking. But to each their own, I ‘spose…