The rising dollar will kill the U.S. economy and jobs
The dollar has been going higher and higher in the past months due to the currency war started by Japan and the fast deteriorations in the Euro countries. This will eventually translate to bad exports and lousy economy for the U.S. companies. Companies like BA, CAT, GE, INTC, etc. can all be adversely affected. It will hurt international exports of all U.S. companies. It will also hurt the tourism related companies like DIS, AXP, and Las Vegas casinos, etc. It will also make the U.S. an even less attractive place for manufacturing. More jobs may be lost in the coming months if the dollar stays this high. The U.S. can easily go back into the slump just like Europe with the dollar so high.
As I expected the rising dollar will be hitting the U.S. companies. The bad FedEx earnings report today is the first confirmation. More bad news will come when companies report their first quarter earnings. Smart investors would take profits and sell here while the stock prices are high.
There was a time when a strong dollar was considered a good thing. The concept of a week dollar became strong when we wanted to expand into foreign markets at a time when foreign consumers had money to buy American products. There are two mitigating factors that now affect this recent historical viewpoint. First, many foreign consumers are weak and can no longer afford to buy products made in their own markets much less American products that are imported into their borders. Secondly, American companies that have opened divisions in foreign contries are not experiencing the market growth that they had back in the 1980s or 1990s. This means that foreign investors will be depending on a strong American dollar in their search for a safe haven if for no other reason than to secure and preserve their personal wealth. We need to define the "strong US dollar" as a good thing once again.