Someone please bump the dollar (or cap the Euro)!

[BigNick]

Since the start of the year, the market hasn't done too badly. So why is my portfolio - in Euros - flat?

I guess it could have something to do with this:

Half my portfolio is outside the Euro zone, and while not every currency has dropped as much as the USD, the Euro has certainly been very strong. I reckon I'd be 5% better off overall if the two had been stable since Jan 1. Grrr.

Still, "make lemonade" and all that: I will probable be visiting the US at least once and maybe twice this year, so I can afford a nicer hotel.

 

[Sandhog]

Fed needs to start raising interest rate despite the worries of economic recovery. If not, we are going to have another late 70's and early 80's inflation horror. Two simple steps to raising value of dollar which will not happen.
1. Stop printing money
2. Raise interest rate

But it won't happen because with people's money in the bank losing value, government pays debt with lower value than when it borrowed.

 

[MichaelB]

Since the start of the year, the market hasn't done too badly. So why is my portfolio - in Euros - flat?

I guess it could have something to do with this:

Half my portfolio is outside the Euro zone, and while not every currency has dropped as much as the USD, the Euro has certainly been very strong. I reckon I'd be 5% better off overall if the two had been stable since Jan 1. Grrr.

True, but you still have accessible and affordable health care.

 

[obgyn65]

I would not be surprised if 1 euro = $2 by 2015.

 

[yakers]

Since oil is pretty much priced in dollars it ought to make living in Europe and other places whose currency is improving cheaper places to live.

 

[Tadpole]

Since the start of the year, the market hasn't done too badly. So why is my portfolio - in Euros - flat?

I guess it could have something to do with this:

Half my portfolio is outside the Euro zone, and while not every currency has dropped as much as the USD, the Euro has certainly been very strong. I reckon I'd be 5% better off overall if the two had been stable since Jan 1. Grrr.

Still, "make lemonade" and all that: I will probable be visiting the US at least once and maybe twice this year, so I can afford a nicer hotel.

Does this make you feel better?
SINGER$MARKET: Annotated US Dollar Index - $USD - Monthly - Cash

 

[MasterBlaster]

If you measure the (US) market in Euros or $AUD then the market is flat or actually declining.

The gains in the Dow and S$P500 make us feel better but in terms of purchasing power the gains just may be illusory.

 

[BigNick]

Since oil is pretty much priced in dollars it ought to make living in Europe and other places whose currency is improving cheaper places to live.

I suppose that it cushions the effects of commodity price rises somewhat, but in local terms we're paying 25% more for gas than 2 years ago, and that's with over half the price being a fixed amount per gallon of tax. Super-Premium gas is close to $10 a gallon in Germany right now.

 

[FinanceDude]

True, but you still have accessible and affordable health care.

But austerity, at least in the UK..........

 

[haha]

Super-Premium gas is close to $10 a gallon in Germany right now.

Does this price seem to be affecting miles driven very much?

Ha

 

[deserat]

@BigNick - yup - ouch is the word here in Deutschland, too. I saw $1.52 for a Euro - double ouch!!!!! Only good thing is my European customers pay in Euros.....

Gas is expensive in general in Europe....ugghhh....and public transit is getting any cheaper either. Only good thing I can think of is the pathways between towns and towns beign ~ 5m apart so walking locally is workable.

 

[BigNick]

Does this price seem to be affecting miles driven very much?

I saw a couple of anecdotes about this from the UK, but I guess the answer will be in the volume of fuel sold, and I'm not sure if those figures are published. I do know that the media coverage tends to be "mentioned once a month, third item on the bulletin", perhaps when a politician makes a suggestion for tweaking the tax, rather than the wall-to-wall coverage which it gets in the US. When Obama released his birth certificate, the BBC's US correspondent went to a diner to ask people what they thought and he reported that most of them wanted to talk about the price of gas. (Any politician who proposed $6/gallon in Europe would gain several percentage points in the ratings!)

 

[frank]

they should raise the interest rates and take the oil out of the hands of pension and hedge fund speculators. with interest rates so low funds can make a lot of money speculating on oil, while ruining the economy for others. oil should not be sold for speculation.

 

[MichaelB]

Hey BigNick, the euro is halfway back. Feeling any better?

 

[Gone4Good]

Lots of talk again about a "plunging dollar." Ranks up there with inflation fears that never seem to materialize.

So let's look at the dollar exchange rate over time.

This graph makes me think three things 1) Exchange rates have moved sideways within a wide band for the last 30 years. 2) I don't recall anyone worrying about a collapse in the dollar between 2001 and 2007 when the slide was far larger than today's. 3) The biggest period of dollar decline (from 1984 to 1987) also corresponded to the years of greatest economic growth.

 

[arebelspy]

Lots of talk again about a "plunging dollar." Ranks up there with inflation fears that never seem to materialize.

So let's look at the dollar exchange rate over time.

This graph makes me think three things 1) Exchange rates have moved sideways within a wide band for the last 30 years. 2) I don't recall anyone worrying about a collapse in the dollar between 2001 and 2007 when the slide was far larger than today's. 3) The biggest period of dollar decline (from 1984 to 1987) also corresponded to the years of greatest economic growth.

I think fears have less to do with exchange rates and more to do with the amount of money we're printing (not literally, but on paper) and the growing amount of national debt.

 

[BigNick]

I just ran the numbers from last July, when if you recall we had a pretty nice market run-up. Since then, excluding new money, I'm up 3.06% in Euros and 15.7% in USD.

 

[clifp]

I just ran the numbers from last July, when if you recall we had a pretty nice market run-up. Since then, excluding new money, I'm up 3.06% in Euros and 15.7% in USD.

Hard to figure out which currency is in worse shape. The dollar with massive deficits and debt and a coming debt crisis. Or the Euro with all of the smaller economy, Ireland, Greece, Spain, Portugal, and I guess now Italy being under stress.

I am thinking the Swiss Franc is looking better and better, along with a smattering of the Brazilian Real, and Chinese Yuan.

 

[arebelspy]

Hard to figure out which currency is in worse shape. The dollar with massive deficits and debt and a coming debt crisis. Or the Euro with all of the smaller economy, Ireland, Greece, Spain, Portugal, and I guess now Italy being under stress.

I am thinking the Swiss Franc is looking better and better, along with a smattering of the Brazilian Real, and Chinese Yuan.

Yeah but then you have the inflation China is potentially facing and the potential collapse of their housing market. I don't know that anyone has a real good idea where any of it is heading, definitely not in the short term.

 

[Chuckanut]

I would not be surprised if 1 euro = $2 by 2015.

Well......... Looks like I am not the only one whose predictions are not the best.

Last I checked a Euro was worth about $1.19.

 

[audreyh1]

Yes - pretty amazing ride up for the dollar!

We're importing deflation from China and Europe now, not inflation.

 

[audreyh1]

Fed needs to start raising interest rate despite the worries of economic recovery. If not, we are going to have another late 70's and early 80's inflation horror. Two simple steps to raising value of dollar which will not happen.
1. Stop printing money
2. Raise interest rate

But it won't happen because with people's money in the bank losing value, government pays debt with lower value than when it borrowed.

Guess it didn't work out that way at all.

Dollar went up even though interest rates have been kept low for an unprecedented amount of time, and the Fed has still been accommodative.

Dollar strength has most to do with who has the strongest economy at any given time.

 

[Bestwifeever]

I knew the dollar would strengthen the minute we cancelled our Spain vacation for late spring.

 

[whatnot]

Thank you Bestwifeever. I am going to France in May. Hope the trend continues!

 

[MichaelB]

Dollar strength has most to do with who has the strongest economy at any given time.

Yup, and there's nothing on the radar screen that might change that trend anytime soon. Looks like QE EU-style is right around the corner and the Euro may fall a whole lot more.