This is a chart of the dollar's decline against the Brazilian real.While the typical American is unlikely to be directly impacted the dollar has nonetheless cut in half in a short time period.
Chances are you know most of the story with Brazil and the surpluses created by the commodity boom.
The dollar has had big declines against a lot of currencies in the last few years without causing panic. My expectation is that this trend, which seems likely to continue albeit with less magnitude IMO, will create a drag, slightly higher rates and below average equity returns (a repeat from a recent post).
3 comments:
Opened position in FXY.
NDX sell signal two days ago, McHugh. NDX throws Hindenberg Omen.
Everything repositioned, time for a breather. Am I diversified?... hell no.
"My wife was at the bank in Shenzhen last week, in the “VIP room” at the bank lines of people were lined up to withdraw their savings to rush headlong into these speculative frenzies in Shenzhen and Shanghai. A woman next to her was withdrawing 2 million Yuan (about $250,000 dollars, a fortune in China), and taking it in a shopping bag to her new brokerage account. Every one there had their own story, but they all had one common theme, BUY STOCKS! The regular bank lobbies were mob scenes of people rushing to withdraw their savings. Every bank had long lines. They are selling their homes, hocking the jewelry, anything to get liquid. Rich and poor alike are withdrawing their money and throwing it at the market. And throwing it is the right metaphor to use: Taxi cab drivers, shoeshine boys, restaurant employees, public employees, you name it, they WANT IN. They are selling their homes, jewelry, or whatever to invest." - Ty Andros
All the financial complexities!All the chaos!The angst!
It makes me appreciate my formative years in Cicero, IL where investing was a passbook bank account and speculation was buying fenced items off the back of a truck.
If you needed more, you could always do some odd jobs for the local mafioso, such as running the numbers or peddling black market (non-taxed) booze and cigs. Nothing like practical experience in asset allocation.
Shorts were little Sicilians in their obligatory Bermudas, black socks and laced black patent leather shoes.
Friendships and family in the neighborhood were valued greater than currency. Their wealth was loyalty and a good hedge against adversity.No speculation was necessary.
For that time, I was diversified.
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