By Mott Capital
Today let’s talk about the Dollar and Donald Trump’s full flurry of activity. President Trump spoke of the Dollar recently and even talked down the Dollar. As you know if you study economics it is okay did not have a super strong Dollar. However, people tend not to talk about publicly because it can cause much disruption in the market. What’s your take on all of the Dollar talk? The strong Dollar has to weigh on corporate earnings especially multinationals. The last time we were talking about pharmaceuticals and if you look at their businesses half of their sales are international. How can a strong Dollar not affect their revenue numbers when they bring those Dollars back to report them. Caterpillar (CAT) is an example of some of those companies that did so well right after the election, the multinational performed very strongly. A strong Dollar is not always ideal; a stable Dollar is perfect. Something that solid, but not so intense that it hurts business, like Goldilocks. Commodities, of course, are going to be impacted by the strong Dollar. What are your thoughts on commodities? A strong Dollar is going to hurt Gold; it will not perform well with a strong dollar. Most of the metals will not perform well with a strong Dollar, and even oil will not perform well with a strong Dollar. At the end of the day, these are all commodities they all have an inverse relationship to the Dollar. Supply-and-demand matters, but when the Dollar is going up six or seven percent a quarter, versus some other currency. A strong Dollar is going to have an impact. For example, why buy Wheat from the US when it is more expensive because the Dollar is strong versus another currency. It just takes fewer Dollars to buy that same barrel oil.
Seth Klarman Tells His Investors: Central Banks Are Treating Investors Like “Foolish Children”
"Surreal doesn't even begin to describe this moment," Seth Klarman noted in his second-quarter letter to the Baupost Group investors. Commenting on the market developments over the past six months, the value investor stated that events, which would typically occur over an extended time frame, had been compressed into just a few months. He noted Read More