Exchange rate blues

[AustCitizen]

Are any CX pilots feeling the negative effects with the weakening of the US dollar (HK dollar.) Against the Aust dollar?

What do you do hold on and hope the US increases or not read the financial section with some people predicting parity between the Aust and US dollars.:sad:

That would have to hurt if sending money home.:ugh:

[GlueBall]

If you are paid in USD, buy growth stocks; like oil; Exxon-Mobil [NYSE-"XOM"], because everybody needs oil, and current demand is outpacing refinery capacities; prices aren't getting cheaper. . . until a new source of energy becomes affordable. Meanwhile, you make money on oil stocks, which are going up, up and up. It's not a secret, just a statement of fact.

[cpdude]

Also look at coal. USA has one of the largest deposits of coal in the world and with the new clean-burn coal technology you will see many new coal-fired power plants being built over the next ten years, IMO.:)

[turbolager]

and uranium :D

[404 Titan]

AustCitizen

The currency trading environment is a very cyclic thing. One has to be very wary of reports or articles they may read or see especially on channels like CNBC, Bloomberg etc. The people interviewed on these channels generally have a vested interest in the positions they take. They will usually harp on about the US government’s foreign debt etc. While it isn’t good it should be looked at in the context of the size of the US economy which still is about ten times the size of the Chinese and Indian economies. If we want to start looking at debt levels then one should look at total debt levels in the economy i.e. private and public, and in this respect most of the high yielding economies aren’t much better than the US. Unlike when I was a currency trader many moons ago for one of the four major banks in Aus, Hedge funds are now dominant players and have a major impact on currency valuations. They predominantly look for currencies that have the highest yields. Currencies such as the NZD, AUD, GBP, and the EURO. Like all markets though they can overheat and there are signs that maybe things in the not too distant future may unravel. There are already serious signs of cracks appearing in the NZ economy caused by the high NZD. While I think that the AUD may and probably will go higher, the longer it stays at these levels the more damage it will do to the Aus economy, especially exporters who are the main driving engine for the buoyant Aus economy at the moment. In the longer term the AUD will probably settle in the mid 70’s to the USD.

Regarding energy stocks? Golden rule number one is to buy when they are low and sell when they are high. Yes they may go higher but I would be very wary at this point in the economic cycle to overexposing myself to this sector. US$100 per barrel for oil isn’t sustainable in today’s economic environment and will most definitely lead to a world wide recession.

[Sir Donald]

Medium to Long term = answer=no worries.

[cunninglinguist]

404, I am in awe of your fiscal savvy ( no, not being sarcastic ) and as such would like ur opinion on the stockmarket " correction " the experts say we are in for shortly in Oz.
Size, timing etc ??
Cheers

[404 Titan]

cunninglinguist

Pretty hard to put a figure on it but I will say 10-15% by the end of the year. As the world economy is very global, all stock markets will be effected with nowhere to hide. Those that have climbed the most and fastest will probably see the greatest falls. >20%. Emerging markets come to mind here.

[Joe le Taxi]

Glueball; Hedging your dollar currency risks by buying oil stocks is a questionable policy as oil is priced in dollars (404 - please correct me if I am wrong - I have never been anything other then an amateur investor). Yes, it is showing good price growth at the moment and it would be a kind of hedge against the fortunes of the airline industry (and therefore; your job) because it is a major cost element, but all you would be doing is going long on the price of oil (and its company); nothing else. That said, I think the price of oil will continue upward in the short to medium term, so I have a couple of oil related stocks which are doing quite well.

There are several products which will give you a straight hedge on the exchange rates, if that is your objective.

[cunninglinguist]

Thanks 404, we are still 5 months from the end of the year, care to take a more precise punt ( i've heard next month )

[404 Titan]

cunninglinguist

Now if I could predict that accurately would I be doing this job?:{

[Numero Crunchero]

Ah 404, I miss our cockpit conversations;-) Most people would have been bored by what we talked about, but I loved it;-)

Anyway, one thing I can add to 404's erudite exposition on exchange rates. A study was done a while ago to see how accurate 1 year predictions of exchange rates, specifically the AUD. On more than 50% of occasions the ACTUAL exchange rate was outside the band of predicted values. In other words, the experts had it wrong more often than right.

So, take what you read about predictions with a grain of salt. This applies to share market and real estate. How many times do you read that property is going up 20% next year to then find out it went up 5% or down.

If the 'experts' were so good, they wouldn't need to charge a commission. Their profit is guaranteed - yours isn't!

[cunninglinguist]

c'mon 404, I only asked for a punt :eek: