Dave Gonigam

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The Leverage in the System and the Weak U.S. Dollar

I found some interesting stuff from GaveKal about the dollar and oil.
 
They write:
 
“The bottom line is that oil consumers around the World have decided to postpone as much as they could the moment of reckoning which the increase in oil prices should have triggered. They have decided to borrow dollars (or yens?) to buy oil. As a result, a number of countries are now not only short oil, but are increasingly short the dollar. This means that, slowly but surely, we are building a corner on the US dollar similar to the one we built in the period from 1978 to 1980, or from 1995-97… ”
 
Their conclusion: buy assets with cash flow denominated in U.S. dollars.
 
Food for thought – especially good for macro guys.
 
I’m not agreeing with it, just passing it on.

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