If you think the Federal Reserve is definitely going to raise interest rates in December, you had better be ready for a super spike in the dollar.
The move we are seeing today in the greenback is searing, and I have bad news for those who think it is good (and I am at CNBC's Republican presidential debate, where many people think it is good): The big international stocks can get crushed here as most of their earnings projections included a stable dollar, not a skyrocketing one.
I don't know, for example, whether Procter & Gamble (PG - Get Report) deserves to be up after its lesser quarter. To me, a strong dollar can really put a hurt on the stock. The same goes for Kimberly-Clark (KMB - Get Report) , although I like its stock very much.
Also, I am less certain about some of the big internationals, particularly the techs, where there's so much riding on the dollar no longer climbing.
This is a sea change -- as much as a sea change can be -- for the banks, which are soaring on the possibility of a hike. Remember, the bank most levered to higher rates is Bank of America (BAC - Get Report) , which is why that stock is breaking out and I think can go much higher if the December scenario does indeed play out.
Posted by: sarah_oz@yahoo.com
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