Why is the USD strengthening ?

16 June 2018

Dear Fellow Investor, 

To all our Muslim friends and clients we wish you a peaceful and happy Hari Raya holiday. 

Last week I reported on the strengthening US Dollar and how that will impact our investments . 

This week, the US Dollar continues to strengthen as money flows out of some of the developing markets including Argentina, Mexico, Indonesia, India and Philippines . 

Why is the USD strengthening ? 

Out of control deficits and spending in the US is the main reason so in order to attract funds to cover the deficits the US Federal Reserve has been raising interest rates. Rising interest rates attracts much needed funds. Fed rate hikes plus Quantitative Tightening is draining hundreds of billions out of emerging markets and those funds are going into the USD. Money always flows to where it gets the best return. 

Solid blue chip Singapore, Hong Kong, US and Malaysian companies with rising earnings, recurring revenue and reliable cash flow will continue to prosper and these companies are somewhat insulated from the currency volatility. The undervalued Ringgit has stabilized after the shock Malaysian election result while the Sing Dollar has actually gone up versus the USD. 

We will continue to focus on established value companies with low or no debt. This will allow us to ride out the Donald Trump induced trade war volatility and continue to collect our dividends. 

Invest well and grow your wealth 

Bill 

This week’s critter is a Maine Coon, the world’s largest cat. 

The Maine Coon is a native New Englander where he was a popular mouser, farm cat and, most likely, ship's cat! The good-natured Maine Coons are the largest domestic cats in the world. Despite their size, they are known as gentle giants because of their relaxed and easy-going personality.