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February 15, 2008 – Comments (5)

Reported today is that import prices have increased by 1.7% this month and analysts only expected 0.3 to 0.4%.

I am not sure what the US dollar has done against all currencies, but it is down about 16% on the Canadian dollar from January of last year.  This has been the general trend.  The companies that produce the imports can't absorb that kind of exchange, so it really would not have been that difficult to have made a more reasonable estimate.

"The year-to-year rise in import prices was 13.7 percent, the biggest 12-month change since 1982 when the department began tracking this data."

The good news for the US is that export prices went up 1.2%, so export companies do have pricing power to cover commodity increases.  I was saying last year that if I was vested in the US, export companies is where I'd be looking, but seeing I had no interest in risking Canadian/US exchange losses, I put zero effort into trying to find US export companies.  I exited all of my US holdings in the fall of 2006 because of exchange concerns and then the US dollar rose from the fall until around January, when it then headed down.

I still think US debt is the biggest reason for currency declines.

I am doing fairly well on my exits, out in July, back in a bit in August, out in Oct/November.  My current plan is to sit out for a year and just watch and then re-evaluate.  I have to admit, I do scare, but the question remains is it "scare easily?"

 

5 Comments – Post Your Own

#1) On February 15, 2008 at 10:13 AM, floridabuilder2 (99.36) wrote:

your level of worry is appropriate... the people that don't know what is going are the ones that should be worried.... that is how it always is....  personally, i am hoping for an inflationary environment, because after a lot of review deflation is real bad news IMHO.....  this is going to be a painful contraction

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#2) On February 15, 2008 at 10:53 AM, saunafool (98.96) wrote:

Inflation of commodities, deflation of houses and stocks.

I'm still fully invested, but mostly in oil companies along with the Gold ETF.

And the dollar went down about 20% against the Euro from September 2006 through present. I just had to make a price adjustment over here, Luxembourg, which required looking up the exchange rate from Sept 2006....$1.25/Euro, now we're knocking on the door of $1.50/Euro.

Although I blame the printing press for the fall in the value of the dollar. Bernanke is pushing money into the system as fast as he can. His academic work centered around the idea of how to avoid a deflationary spiral like the Great Depression or Japan in the 90's, and his answer is to drop money from the skies.

Inflation is on the way.

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#3) On February 15, 2008 at 2:33 PM, StockSpreadsheet (74.78) wrote:

dwot,

Out of curiosity, why aren't you invested in more Canadian stocks?  Zero currency risk.  POT has been doing well.  The Canadian Oilsands company has been doing fairly well.  Canada is a huge commodities exporter, so this seems that it would be the perfect market for Canadian companies, (since commodities have been on a tear).  RIO bought INCO, and RIO has been doing well, so they could be a stock that you could have been in if you owned the Canadian nickel company.  Just curious.  I think there are still good plays in the market that wouldn't face the currency risk you fear, and could still possibly make you money.

Anyway, good luck with your investing.

Craig 

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#4) On February 15, 2008 at 3:21 PM, GS751 (27.57) wrote:

the other day the Oracle spoke and said "I usted to own canadian dollars and still wished I owned canadian dollars"

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#5) On February 15, 2008 at 6:11 PM, dwot (97.48) wrote:

fb, I think inflation is bad as well as wages will struggle to keep up.

sf, I guess the Canadian dollar must have done a bit of a decline to other currencies though Sept 06 until about January 07 as I thought the Canadian dollar had also gained on the Euro some since Jan 07.

Craig, I did not trust the company I was using as a broker so I was planning of being 20-25% in or just to trade, but when I tried to transfer some money, well, it just didn't move as requested.  That was when I decided to simply exit brokerage accounts.  

GS, I read that... 

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