Strong Dollar; International Tailspin
It seems bad bets aren’t only limited to individuals. Big companies are taking a hit too. According to the Wall Street Journal the strong dollar has left some international firms in a tailspin, rather unexpectedly.
The Journal writes, “bad bets were made using currency derivatives -- contracts tied to the value of the U.S. dollar. Companies lost badly when the dollar shot up in value starting in early September as investors cashed out of investments in emerging markets, fleeing to safer havens. And as companies raced to close out their positions they forced local currencies to tumble still further.”
In an attempt to mitigate this and the broader financial crisis, the White House set a date of November 15 for the first of a series of international crisis summits that will bring together the G20, which includes major industrial economies plus big emerging-market countries like China, India and Brazil.
If you’re wondering if there’s a trade here Jeff Macke doesn’t see one. If you’re not long the dollar you’re late ,he says. Other than that, I don’t care that people are force liquidating, I wouldn’t trade this, counsels Jeff Macke.
I would be long the yen, counters Tim Seymour and possibly short a couple emerging markets currencies.
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Trader disclosure: On Oct.22, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money trader; Macke Owns (SDS), (UUP), (MSFT), (BNI), (MCD); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman Owns (GS), (PM), (RAI), (DEO); Finerman's Firm Owns (MO), (MSFT); Finerman's Firm Is Short (BBT), (COF), (IYR), (IJR), (USO), (SPY), (IWM); Seymour Owns (AAPL), (BAC), (EEM), (F), (MER)