by Rick Ackerman
The U.S. dollar has been one of the few big market winners lately, but this is hardly a good thing. If the greenback continues to strengthen, it will hurt U.S. multinationals whose overseas revenues are reckoned in currencies that would be falling. In addition, all who owe will need to repay their loans in dollars more dear than when they were borrowed. And it will sink prices for a broad variety of commodities, particular crude oil, that have been used to collateralize a super-leveraged derivatives market worth perhaps $1.5 quadrillion notional. Do you see the problem?
Throughout its 25-year history, Rick’s Picks and its predecessor, Black Box Forecasts, have never wavered in their bullish outlook for the dollar. In recent years, our projection for the Dollar Index (DXY), currently trading around 101, has called for a test of highs near 120 recorded in 2002. When DXY slid to 71 between 2002-08, we saw this as merely corrective.