Foreign Currency

Team Montgomery has long warned the Australian dollar, at near parity to the US dollar, has a fair bit of downside risk (see here, here and here). With that hypothesis now playing out – and commentators starting to crow – you may be wondering which companies may benefit from a stronger US dollar. continue…

by Ben MacNevin Posted in Foreign Currency, Insightful Insights.

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This morning, we read with interest the views of Chris Watling from Longview Economics, who believes the Fed is underestimating the strength of the US economy. continue…

by Roger Montgomery Posted in Economics, Foreign Currency, Insightful Insights.

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One thing we can say about the Reserve Bank of New Zealand is they certainly move quickly when they think it is appropriate to do so.

For example, in the nine-month period between July 2008 and April 2009, the New Zealand official cash rate (OCR) was cut on seven occasions, from 8.25 per cent to 2.5 per cent.

Now the opposite is occurring and in the past four months the OCR has been increased on four occasions – each by 0.25 per cent – from 2.5 per cent to 3.5 per cent. The New Zealand economy is expected to grow by 3.7 per cent in 2014, with the recovery in construction and net migration adding to housing and household demand.

The graph below compares the New Zealand 90-day bank bill rate with the New Zealand official cash rate, which commenced life in March 1999 at 4.5 per cent.

by David Buckland Posted in Financial Services, Foreign Currency, Insightful Insights, Value.able.

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There is nothing in the dark that isn’t there when the lights are on.

It seems you can ignore warnings of an imminent stock market crash. The US Fed is happy for a bubble to form, and it’s not even worried about any subsequent bust. No longer is the US Fed beholden to fears of irrational exuberance, and commentators who point to rising risks may simply be premature, if not completely missing the point of ignoring who is in charge. continue…

by Roger Montgomery Posted in Economics, Foreign Currency, Insightful Insights.

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The make up of consumer price index (CPI) data in many countries is not necessarily closely related to the cost of living. For example, in the US, ‘everyday’ consumer expenditure on food and energy has less than a 25 per cent weighting on their CPI, and is excluded altogether from a ‘core’ inflation. continue…

by David Buckland Posted in Economics, Foreign Currency, Insightful Insights.

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I have just returned from a short trip to the US, where I saw Bubba Watson win the US Masters at The Augusta National Golf Club. While this is indeed an extraordinary sporting event, I think I now have a better idea why US corporate profit margins (as a percent of nominal GDP) are at record-high levels. continue…

by David Buckland Posted in Foreign Currency, Insightful Insights, Value.able.

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We have written about China Rongsheng Heavy Industries, one of the largest shipbuilders in the world, on several occasions. (See our posts from August 2012, and July 2013). continue…

by David Buckland Posted in Companies, Financial Services, Foreign Currency, Insightful Insights.

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My friend and Joint Chief Executive of Philo Capital Advisers, Ashley Owen, recently penned this piece on the Aussie dollar. As you know, we have suggested since US$1.05 that Australia needs a lower currency. Well, according to Ashley, we’re going to get one. continue…

by Roger Montgomery Posted in Energy / Resources, Foreign Currency, Insightful Insights.

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Since the beginning of 2014 the iron ore price has declined by around 20 per cent, from US$130-$135/tonne, to US$105-$110/tonne. Unusually, the Australian dollar to US dollar exchange rate has, over this period, appreciated slightly to just over US$0.90. continue…

by David Buckland Posted in Energy / Resources, Foreign Currency.

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Remember last year all those analysts saying that because the price of iron ore hadn’t gone down in 2013 that it wouldn’t? continue…

by Russell Muldoon Posted in Energy / Resources, Foreign Currency.

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