Archive for US dollar

The Rising US Dollar, Michael Douville

Posted in Michael Douville with tags , , , , , , on July 7, 2018 by paulthepoke

1 Samuel 2:7 The LORD makes poor and rich; He brings low, He also exalts.

Proverbs 3:13-16 How blessed is the man who finds wisdom and the man who gains understanding. For her profit is better than the profit of silver and her gain better than fine gold. She is more precious than jewels; and nothing you desire compares with her. Long life is in her right hand; in her left hand are riches and honor.

Michael

The US enjoys the Global Reserve Currency status. Virtually all of the major business transactions throughout the world are priced in Dollars. Sovereign Wealth Funds, Pension Funds, Insurance Funds, Corporate funds need to “Park” billions and billions of transactional cash! The ONLY currency liquid and vast enough is the US Dollar! Not Lire, Not Yuan, Not Euro, not the Yen, only the US Dollar. It is stable, safe, liquid and accepted around the World. International pricing expresses the transactional cost in US Dollars of oil, copper, grain, lead, tallow, butter, milk,  beef, etc. along with virtually all International agreements. The dollar does fluctuate, but pegging to the US Dollar standardizes Global transactions.

A weak US Dollar is good for the Global Economic community. The US Dollar was 102.21  October 1, 2016, just prior to the Presidential Elections. The World experienced “A cyclic upturn in a structural downturn” exactly as ECRI (Economic Cycle Research Institute) forecasted.  The Dollar then declined to 88.25 in February 2018; which may have been a cyclic bottom.  A weaker dollar is good for Emerging Market Economies. Raw Material sales translate into more local currency which then can buy more local and regional  goods and services. Local inflation is reduced.  During the past decade, Sovereigns around the World have gorged on cheap loans priced well below 1%, some even negative. With a declining US Dollar, not only are the loans Historically cheap, a 20% decline in currency exchange equates to repaying only $80 million of the $100 million borrowed plus receiving a higher price for exports usually oil, copper, aluminum, etc.

money
photo: MarketWatch

Like all things, the US Dollar cycles. It does not remain cheap forever. Timing becomes important. The US Dollar has risen and risen very fast from a possible low of 88 just a few months ago to a recent high of 96. This cycle of peaks and valleys is not a new phenomena; this cycle repeats historically. What is new is the record DEBT pervasive throughout the World. Debtors have enjoyed the discount of a declining US Dollar; that is now gone. Interest rates at or near zero are gone in the US and scheduled to be gone soon everywhere else. Obscene amounts of DEBT have propelled the good fortunes of virtually everyone from Credit Cards and HELOCs for citizens to massive Public and Sovereign debt in EVERY Village, Hamlet, Town, City, Municipality, County, State and Nation on the face of the PLANET!!

 

A strong Dollar will reduce the value of exports thereby slowing the economy in exporting Nations. A negative spiral’s outcome is a slowing of all global economies. This then results  in declining demand that ripples throughout the World. That is bad enough; add in rapidly rising rates and there lies a recipe for Catastrophe! The obscene debt is rarely paid off, rarely even reduced. The debt is rolled over or refinanced. A rise to only 2% equates to multiples of 10 to 20 times the debt service. There is going to be  a very rude awakening very soon!

Debt will default and these defaults will accelerate throughout the world pressuring rates even higher as nonpayment risk pressures returns. Bonds and Bond Funds will be at HUGE RISK. All manners of Debt will be affected. Rates will rise and rise quicker than anyone anticipates. Get out of Debt! Payoff Credit Cards, Helocs, anything that floats with an Index. Refinance into fixed rate LONG TERM debt.  Raise cash!  The dollar cycle peak is forecast to reach 103.8 as a typical permutation in a typical cycle.  This may not be TYPICAL! Turmoil could drive the US Dollar to 120 causing massive disruptions!  For those aware, for those prepared, Generational Wealth can be achieved when the cycle again turns down……

https://michaeldouville.com

 

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Dollar Rising, Michael Douville

Posted in Michael Douville with tags , , , , , , , , on June 21, 2018 by paulthepoke

Proverbs 20:10 Unequal weights and unequal measures are both alike an abomination to the LORD.

Micah 6:10-11 Can I forget any longer the treasures of wickedness in the house of the wicked, and the scant measure that is accursed? Shall I acquit the man with wicked scales and with a bag of deceitful weights?

Michael

All currencies are not created equal. Values of currencies change. God is not a fan of currency manipulation. Imagine that, humanity outside of God’s economic laws…

The end result of currency changes can be dramatic. Michael explains the consequences of a rising dollar and what it means to global economics.

Understand the times we are in. Currently, soft commodities (grains such as barley and wheat) are relatively cheap. These times will not last forever. Make plans now while goods are inexpensive. Understand where we are going. Have a plan.

The dollar is rising causing Systemically Important Financial (SIFI) to Plummet.

 

michael@michaeldouville.com

https://michaeldouville.com/

Time to Raise Cash…Featuring Michael Douville

Posted in Michael Douville with tags , , , , , , , , , , , , on May 3, 2018 by paulthepoke

Leviticus 19:35-36 You shall do no wrong in judgment, in measurement of weight, or capacity. You shall have just balances, just weights, a just ephah, and a just hin; I am the LORD your God, who brought you out from the land of Egypt.

Proverbs 11:1 A false balance is an abomination to the LORD, but a just weight is his delight.

Currency manipulation is global issue. The above verses are two of many examples provided in Scripture. All currencies are not balanced the same. Imagine that, the world’s economy is out of balance in regards to the standard of the Bible. All currencies are not created equal. There are global economic consequences when standards are out of balance and there is reconfiguration. God is not a big fan.

 

Michael

Many Researchers have been forecasting a rising US Dollar. This seems like an impossibility, but technical methodology from several different disciplines are coming to the same conclusion. A top researcher in March placed a 103.8 target from 88.1; currently, the dollar has risen to 92.46. Should the target be exceeded, a Spike could develop going much higher. The Dollar rose .7% on May 1, 2018 alone.  A strong dollar will pressure the repayments of debt across the Globe in an environment of struggling Municipalities, States, and Sovereign debtors. A stronger dollar will not only change the repayments dynamics, but the exports in Emerging Market Countries are affected as Commodities expressed in US Dollars lose value.

A stronger Dollar is enhanced not only by the perception that the US Economy will be stronger than any other, but also by the Interest Rate differential across the Globe and the avowed Federal Reserve policy of raising short term rates. Higher rates from both the Federal Reserve and the LIBOR affect 40-60% of all Global Debt; currently exceeding the 2008 Debt Record and now over $217 Trillion Dollars. Charles Nenner called the 10 year Treasury low at 1.6% in July of 2016. The trend line from 1981 has been broken at the 2.65% level and has now exceeded 3%; better than an 85% increase. With the trend line broken, rates could rise swiftly and approach 4.5% faster than thought possible. Normalization is occurring as Central Bank intervention recedes. Normal could easily be 5-6%; a double from here.

Prices in asset classes will be affected. Housing prices will be compressed as rates rise; Home buyers buy based on payments. Higher rates equal lower affordability; some Luxury Markets are already affected!  Equity prices will be affected as repatriated funds are reduced inversely with a stronger dollar. The US Dollar has depreciated 24% since the Presidential election. Take for example a US manufactured auto sold for 20,000 Euros in Germany in December 2016; the same car sold for 20,000 Euros in December 2017 netted the US Manufacturer 20+% more profit due to the Dollar decline; great news for Stock Prices. Bad news when the US Dollar rises; the same formula works negatively in reverse. Look for earnings to decline; stocks are correlated to earnings. Need I mention Bonds? Higher rates will decimate Bond values as well as higher rates will cause many more defaults across the Globe, again affecting the value of Fixed Income. Commodities will also be negatively affected by a spiking US Dollar as it will take fewer Dollars to purchase in local Currency as well as higher rates will certainly curb demand.

What to do? Everything cycles! Raise cash to purchase assets at lower US pricing. Research is indicating it will probably be a Spike; vicious, but not exceedingly long term. This will present HUGE opportunities for those prepared. Every Investor has personal goals. Review your portfolio and make the proper adjustments.

michael@michaeldouville.com

https://michaeldouville.com

https://paulthepoke.com/category/michael-douville/

 

 

 

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