Cheap dollar, overseas buyouts
Now that the dollar is its cheapest in quite some time, 50% discount to the Euro in just 5 years, there is some great room for foreign companies to start the buying spree. The market slowdown and minor correction is likely to start off the investment from foreign investors. Stocks, by price earnings multiple are the cheapest in years, a lower dollar makes that proposition even better for overseas investment.
Iran finally stopped selling oil in dollars, which will further lower the demand for greenbacks and as a result, their value on the open markets. The Japanese buy a considerable amount of their oil from Iran, and are now contracting to buy oil in yen rather than USD. While Japan has been buying up a large portion of US debt and dollars, the buying will likely slow or stop as they have no need outside the realm of oil. This leads me to think that Japanese buying in the US markets will explode. The US dollar reserves of Japan will likely turn to US securities, as the dollar buys little else around the world.
An influx of foreign purchases will probably first go into energy. Oil companies are a prime investment for government money, China has been buying stakes in oil companies around the world to feed its addiction. Oil is slim in supply and high in price, countries have a stake in keeping their oil profits and production domestic.
The oil industry plus many discounted consumer industries will likely start seeing some global consolidation. To the Europeans, even Wal-Mart is selling at a 50% discount from a 5 years ago. Smaller Euro oriented companies will start the consolidation process. Foreign countries will likely begin to dump their own currency in favor of the depressed dollar to lock in the wealth of a fledging currency.
Stimulus checks should start hitting the economy as well. We’re in for a modest upswing, provided that commodity prices stay level. Net buyer here, wait for a small correction to get in on the positive quarters that will follow.