The US isn't self sufficient in food. Food imports are going to get more expensive.
The world doesn't need that much guns and missiles. There are two major markets currently and that's all mostly.
You may be tempted to assume that only active participants in wars buy weapons, but that has never been the case. And especially now, you have many countries trying to restock and prepare.
Yet they seem to be begging for them pretty hard.
American socia media takes care that they are all engaged, quarrelsome, and polarized.
Countries may be unwilling to trade with an increasingly belligerent US that slaps everyone with tariffs. In fact, many will just slap the US with tariffs and other barriers of their own.
No major US export sector operates exclusively as an exporter without any exposure to imports or global supply chains. Even the largest US exporting industries (oil and gas extraction, civilian aircraft and parts, and pharmaceuticals) rely in varying degrees on imported inputs, components, or capital equipment... which companies are you talking about?
A good example I heard today was this. Imagine if you have a legit money printer. Show me the most pure human and eventually they will hit that button and print new money. That's what we've been doing for a long time now to finance all the wars and bailouts.
https://fred.stlouisfed.org/series/M2SL
A good book: https://www.lynalden.com/broken-money/
Good luck getting loans & investments for your 100% American business ideas.
Hint: Go to any country that is not called the USA and try to get a $1M equivalent loan/investment for your startup and let us know how it goes.
CHIPS act goes away, something else comes, trade deals are made, then tariffs, then no tariffs, then tariffs again.
You don’t offset a cheaper dollar against counter tariffs.
You’re one nationalization away from becoming the next Argentina.
and a USD denominated one: https://finance.yahoo.com/quote/SPY/
Have a look at the 1 year view. Note the fairly dramatic difference.
Wow this is the case in most of the Europe too, what a coincidence. Fancy investing in our premium real estate?
But I think any weakness is temporary. With a stable government and abundant natural resources that will be even more sought-after in an AI-driven world and largely insulated from automation Australia’s long-term prospects look strong.
Always check both local currency and USD returns when evaluating international markets.
1. You exchange Dollars for Euros
2. You buy a stock in Euros
3. You hold the stock in Euros for a period of time
4. You sell the stock in Euros
5. You exchange your Euros for Dollars.
The difference in the exchange rate in step 1 and 5 can have a very large impact on your total return, often times a larger impact than step 3.
But the euro itself has climbed ~10% YTD vs the dollar (≈ $1.02 → $1.12-1.18). So you get an ~18% gain if you invest in MSCI Europe in dollars.
Europe hasn't "beaten" US stocks because its companies suddenly out-executed; most of the gap is the stronger euro.
Not that it matters who’s "winning." My gripe is with US headlines that shout "Japan stocks are on fire" or "Europe stocks are on fire," when what’s really happening is that global markets are rising together and currency swings make one region look better than another.
Historically, the euro has generally been a good bit more valuable than the dollar. But in 2022, the dollar was more valuable than the euro at a point. Recently it's been bouncing around at nearly 1 euro=1 dollar.
Then there's the yen. Used to bounce around between 1 dollar = 100~110 yen. Recently reached 1 dollar = 162 yen.
The dollar losing its value is a return to the pre-covid norm. Lots of countries pumped money into the US to make money off skyrocketing stocks and high interest rates, and now they're pulling it back into their countries. It's a high that can't last forever. And if it did last forever, that would not be good for the world as a whole since it would mean every country is supporting the US at the cost of devaluing themselves.
That's an odd way of saying the US doubled it's federal budget from $3T to $6T in response to COVID and has now ensconced this pork further into law. Under a "republican" administration, no less.
> The dollar losing its value is a return to the pre-covid norm.
Which is to say that even $3T contained an unjustified amount of debt spending just not as obscene as it is today.
> It's a high that can't last forever.
That's the "big beautiful bill" for ya.
Are you under the impression that this is surprising? Republicans are consistently the ones spending more when they are in power. It's time to dispel this myth that they are fiscally "conservative", they have presented more unbalanced/defficitary budgets than Democrats and the latter in recent memories are the only ones who managed to present budget with surpluses, under Clinton.
That's what inflation does.
People are routinely taught that inflation is the “decline of value of money”, but that's not the reality. Inflation is just the increase in consumer price, which is perceived as a decline in the relative value of the money, but its absolute value on foreign markets isn't (directly) affected by inflation.
And when the Central bank raise the interest rate to cool the economy down and temper inflation, then the absolute value of the money rises (because the higher the interest rates, the pricier the currency on the FX market). This increase in the currency value in turn also helps fighting inflation because it lowers the cost of imported goods.
So, indirectly, because of the central bank's reaction, inflation is actually increasing the absolute value of money, and this is what we saw in 2022 when the Fed raised the interest rates 9 month or so before the ECB start doing the same (because the inflation came in advance for the US compared to EU).
That's what they want as export based economies.
A balance is necessary, and things have been off balance recently.
Ask yourself, did you panic during these years? Mostly no. These were pretty good years.
Economists: No, no, no, no...
The People: Genius! Genius! Let's vote him!
It will be reflected in overall inflation statistics, and that limits the Fed’s ability to cut rates.
A vote for Trump, as it turns out, was a vote to increase US national debt by double what anyone increased it by before (which was also Trump, so anyone saying they "didn't see this coming" ...)
Contrary to what xkcd or NYT might tell you, actual economic institutions like the IMF and the World Bank are coigzant of the issues caused by the status quo and largely view the Trumpian diagnosis, if not the horrid execution, as correct.
I'm afraid we're to live in very interesting times real soon.
Maybe crypto will eventually be useful for trade?
Here's how the US Dollar Index has performed over the last ~30 years. The swing looks pretty typical to me. If it drops another 10% (as the article says Morgan Stanley thinks it might) then I could see this event as an outlier. For now, I find it interesting but not especially concerning. There's pros and cons to having stronger/weaker currency. I think it's probably worse to have a volatile currency than an especially strong or weak one?
I take it that the "on track" is determined by extending a current downtrend as if it will continue precisely the same, for the next 6 months, which seems unlikely.
I get that with the recent passage of this US bill, people want to pile on. I can assure you, that Canadians have no love of the current administration. But this is another click-baitish thing being done to us all, feeding on people's upset, the time of year it is, the US holiday, and more.
Ah well.
Not sure what to keep my retirement fund in if not those though :c
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