Cheap dollar, overseas buyouts
Saturday, May 3rd, 2008Now 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. Continue Reading »