FinancialGauge
Independent Strategic Thinking
October 2014
The Mighty US Dollar
Back in the USA
“I’m so glad to be back in the USA” are the lyrics to one of Chuck Berry’s great tunes – which perfectly describe the current global environment. The defining characteristic of the second half of this year has been the sharp appreciation of the US dollar against all major foreign currencies – reflecting rising geopolitical risk and floundering overseas economies, in contrast to the US. So while the Fed has been signaling the start of a tightening cycle, central banks elsewhere are still going the other way but without much success in awakening “animal spirits” a la Keynes. This has contributed to the dollar's rise without helping emerging and developed markets ex US equities, as measured by the MSCI Emerging Markets and EAFE indexes, respectively.
Strategic Implications:
Continued strength of the US dollar and weakening foreign equity markets (especially in dollar terms) suggest increasing the tilt toward US assets.
|
This article is distributed for informational purposes only. All information contained herein should not be considered as investment advice or a recommendation of any particular strategy, security, investment product or financial instrument. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed
|
|
