04/29/2008

Well, Well, Hell-o Dollar!

Hello:

At close to a 12 year low against the Japanese Yen, could it be that the Dollar is preparing to make a comeback? If so, then we would say "Hello, Dollar!" and welcome back a stronger currency.

According to a large Wall Street firm's April global manager survey, 61% of managers believe that the US Dollar is undervalued, and 71% believe the euro is overvalued. An emerging -market strategist at the same firm indicates that managers are looking for a reason to invest domestically, but are not convinced the US economy has bottomed out. If the US economy begins to rebound before the Eurozone's, and if the European Central Bank (ECB) begins to cut interest rates in response to Europe's deflating credit bubble, then money might begin to migrate back to the New World as early as this summer.

Will the Fed cut interest rates this meeting? It is possible, but if so, the cut is likely to be small because lenders, in general, are not passing the lower interest rates along to borrowers. This situation makes the potentially positive impact of lower interest rates on the economy minor at best. Also rising food and fuel prices are raising the inflation fears in some Fed Committee members.

Tangible assets have appreciated significantly in the past few years. Maybe it is time to accept gifts of antiques, artwork, classic cars, etc. Does your organization have it's gift acceptance policy up to date? Please feel free to contact us for more information.

 

Terri G. Millson, CIMA, CIMC President

Ray Dicius, CSA, GEPC LPL Branch Manager