For traders who specialize in the foreign exchange markets, the continuing fall of the US dollar should be on the top of your radar for 2021 and beyond.
According to several financial experts, the value of the US dollar appears to be far more than a short-term fad. It could become a notable long-term trend unless drastic reversals are made in monetary and economic policies, says Equity Group Investments chairman Sam Zell:
“The single greatest risk that we are dealing with today is the loss of the US dollar as the reserve currency. If we keep doing what we are doing right now, I think it is 10 or 15 years away.
A 25% reduction in our standard of living could take place if the dollar loses its reserve status… Unlimited debt and irresponsible activity don’t lead to positive outcomes. That’s a disastrous kind of scenario.”
And he’s not the only wealthy investor who has this projection. Billionaire Ray Dalio of Bridgewater seems to be in agreement:
“The system needs to be re-engineered to do this. But if we don’t do this engineering well, we’re going to spend in an unlimited way and deal with that by creating debt that won’t ever be paid back.
Within the next five years you could see a situation in which foreigners who have been lending money to the United States won’t want to.”
Part of this drop has to do with Trump’s ongoing battle against China and other foreign countries, says Asia Times:
“After four years of rage tweeting about an ‘undervalued’ Chinese yuan that’s ‘killing us,’ Trump’s Treasury Department opted to put the Vietnamese dong on its dreaded currency manipulators list instead. Xi Jinping’s China got a last-minute reprieve in a new US Treasury report.
No one knows what’s in Treasury Secretary Steven Mnuchin’s head. One possibility: with the dollar down 6.5% versus the yuan this year and the Federal Reserve stimulating like crazy, China could simply – and credibly – retort that it’s Trump who’s trying to devalue his way to recovery.”
Unlike the USA, the Asian countries have been doing a great job at recovering from the COVID-19 pandemic. Just in China and Taiwan, we are already seeing photos of people who are resuming life as normal – no masks, no social distancing, and no lockdowns.
It will be very interesting to see how the FX markets play out in 2021, although I suspect many of the big traders at the institutional banks will still remain interested in the short-term spikes of volatility. I know of VERY few people who are actively investing in currency pairs for long-term trades.
But if you happen to be one of such individuals, you’ll want to pay close attention to this phenomenon.
What do YOU think will happen to the USD, relative to the Asian currencies? Reply to this newsletter and let us know what your predictions are!
Stocks of Airline Companies Took a Sharp Downturn Yesterday
It’s been a terrible start to the week for several airline companies, as their shares went down during yesterday’s trading session:
- American Airlines: -2.48%
- United: -1.53%
- Spirit: -1.97%
- JetBlue: -0.77%
- Delta: -1.33%
What’s interesting about these numbers is that Monday was an even mix of good news and bad news, as The Motley Fool puts it:
“…the industry learned over the weekend that the planned second stimulus bill that is working its way through Congress would include an additional $15 billion in support for airlines.
That money would be for payroll support, and not a direct bailout, meaning the money would go to bringing back 32,000 airline workers who have been furloughed… By having the employees on the payrolls airlines can help keep them trained and ready to fly, meaning they will be able to bounce back quicker as things recover.
Unfortunately, the stimulus news was overshadowed by a grim development in the battle to fight the pandemic. The United Kingdom is beefing up lockdown restrictions in response to a more transmissible form of COVID-19, and many countries are restricting travel to and from Britain.”
Keep a sharp eye out for the breaking news about the brand new COVID-19 mutant spreading throughout UK and possibly the rest of Europe. If the situation gets out of hand, it could be yet another death blow for the US airline industry and international tourism as a whole…
MORE Countries Are Banning Travel from the UK…
Due to the news of the COVID-19 mutant traveling across the entire country of United Kingdom, all of southern England has been placed under the most restrictive lockdowns in order to slow the spread. But as you can imagine, several countries are taking precautionary measures to prevent the Brits from passing through their borders.
According to MarketWatch:
“France banned all travel from the UK for 48 hours starting at midnight Sunday, while officials figure out a next step. French officials specified that ‘flows of people or transport to the UK are not affected.’
Italy’s foreign affairs minister Luigi Di Maio said via Twitter on Sunday that the country would suspend flights from the UK The Netherlands government announced its own ban on Saturday evening.
From midnight, Belgium will close its borders to travelers coming from the UK for a period of 24 hours, Prime Minister Alexander De Croo announced on Sunday. The Belgian government said anyone arriving from the UK via train or plane cannot enter the country for 24 hours, with Eurostar connections also temporarily halted. It said that may be extended.
Canada on Sunday banned flights from the UK, and Ireland, Germany, Austria and Bulgaria also announced UK travel restrictions.”
It’s going to be a very rough ride for the travel industry in 2021. Just when you think we’re on the right track towards recovery, a new virus with 70% more transmissibility than the original strain shows up and wrecks all of the progress made thus far. You really hate to see it…
Over 1 Million American Passengers Screened This Past Weekend!
I can’t say for sure if travel is going to make a full recovery in 2021 or even 2022, but we can certainly express some level of optimism when we see some much-needed spikes in travel volume.
From Travel + Leisure:
“More than 1 million people passed through US airports on three consecutive days this weekend, according to the Transportation Security Administration, the first time the agency has recorded numbers like that since March.
On Friday, the TSA screened just under 1.066 passengers, followed by 1.073 on Saturday, and 1.065 on Sunday. This was far lower than this weekend last year when the agency saw over 2 million passengers each day, but it showed Americans are hitting the skies before the Christmas holiday, despite advice from experts to hunker down.”
Once again, the indomitable American desire to travel the world shows its head. Despite repeated warnings from health officials to avoid all forms of non-essential travel, people are fed up with following orders. Especially when the same people advocating those rules get caught refusing to live by them.
What about you, though? What are YOUR travel plans for the Christmas holidays, if at all? Reply to this newsletter and let us know where you’re going!
Travelers May Feel Safe at Airports but the Employees Don’t…
As airports get ready to accommodate higher volumes of foot traffic from excited passengers, the employees themselves are starting to feel more concerned about their safety than ever.
TravelPulse reports on this trend amongst frontline aviation workers, noting that they feel uncomfortable with the increased risk of testing positive for COVID-19:
“Eight out of 10 workers on the frontlines at US airports across the country fear for their safety due to the coronavirus pandemic, according to a new survey conducted by the Service Employees International Union (SEIU).
The workers feel they are being unnecessarily exposed to risk through inadequate safety equipment or failure to offer sick pay, according to CNN.
Of the 900 workers from 42 airports who were surveyed, 80% said they felt their work puts them at increased risk of COVID-19 – and 20% of the workers said they hadn’t been given personal protective equipment by their employer, airport or airline.”
Several airlines have gone on record to dispute the findings of this survey, noting that they are over-prepared to give their employees whatever they need – free of charge – to feel safe at their place of employment.
Regardless of who is right and who is wrong, I would likely feel increased concerns for my personal safety if I was in their shoes. I couldn’t imagine showing up to work while facing the real fear of one passenger having COVID-19 and possibly transmitting it my way.