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kleinbl00  ·  2556 days ago  ·  link  ·    ·  parent  ·  post: The French Election Is Way Too Close To Call

    And strong dollars are good for Americans because it technically means that each hour I work is worth more, right?

It's not that straightforward.

Let's say you make clothing - you're Union and you're on the line making overalls for Carhartt. Your main competitor is cheap, shitty Chinese coveralls from Bass Pro Shops. If the dollar rises 20% against the Renminbi, your product suddenly costs 20% more than cheap Chinese coveralls.

But let's say you're a coffee roaster - you buy beans wholesale from Venezuela. The dollar rises 20% vs. the Bolivar and suddenly all your coffee purchases are 20% off. Your roasting costs haven't changed and depending on who (how) you're paying for your beans to arrive, your shipping costs went down, too.

Maybe you're a real estate agent and, like real estate agents everywhere, you've discovered that an astonishing percentage of your sales are cash purchases by Asian REITs. Suddenly the American housing market costs 20% more than it did last year... but the guys who bought last year have made 20% (above and beyond local appreciation) simply from currency appreciation. All of a sudden you're selling a bunch of Asian REIT holdings, rather than facilitating their buys. Your net position is unchanged.

But maybe you're a home buyer and with all the Chinese selling their investment houses it's a buyer's market all of a sudden. But maybe you've been waiting for the peak of the market to sell your home first but now you're competing against all these Asian buyers looking to offload their purchases.

I guess the Euro is up like 2% right now. My eyes popped out of my head when "up 2%" was revealed to be $1.09. In my head, the Euro is anchored at like $1.35, $1.39. You're a car guy - MSRP on a 2017 Camaro is around $27k. MSRP on an Audi TT is around $43k. Let's say the Euro heads to .79, rather than $1.09 - suddenly an Audi TT is a $31k car.

Sucks if you build Chevys for a living. Kinda rules if you'd rather drive an Audi TT. If you're an Audi dealer? You're rawkin'. If you're a Chevy dealer? Well, then we get into all the cars made in Mexico and Canada and the fact that you make a lot of money on maintenance etc. etc. etc.

There's no easy answer. Despite the populist stances on isolationism and America First, our economic web is a complicated one.