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The Coming Bear Market: Part II How to Prepare
Issue #492, October 16, 2017

Some Observations on Cemeteries
Issue #Interim Bulletin #491A, October 12, 2017

The Coming Bear Market: Part I: The Myth of Buy and Hold Forever
Issue #491, October 09, 2017

The Market makes New Highs
Issue #490, October 02, 2017

The Importance of a New High
Issue #489, September 25, 2017

A Little Insurance: Wealth, War and Wisdom
Issue #488, September 18, 2017

Some Observations
Issue #487, September 11, 2017

How to be Successful in Your Career
Issue #486A, September 07, 2017

How NOT to Buy a Home
Issue #486, September 04, 2017

This Week in the Market
Issue #485, August 28, 2017

Is the “Trump Bump” Running Out of Gas?
Issue #484, August 21, 2017

Gold is on the Move
Issue #483, August 14, 2017

The Importance of Estimation
Issue #482, August 07, 2017

Buying Art and Collecting: Part II of II
Issue #481, July 31, 2017

Buying Art and Collecting in General, Part I of II
Issue #480, July 24, 2017

Physicians need to be More Forceful: Follow-up
Issue #479, July 17, 2017

Physicians need to be More Forceful
Issue #478, July 10, 2017

Your First “Real” Investment
Issue #477, July 03, 2017

Leasing a Watch: Don’t
Issue #476, June 26, 2017

The Importance of Your Children having a Job
Issue #475, June 16, 2017

The Problem with Medical Student Debt is—the Med Schools
Issue #474, June 12, 2017

Critters and Varmints in your Home and Yard
Issue #473A, June 07, 2017

Leveraged ETFs
Issue #472, May 29, 2017

Leasing a Vehicle: Don’t!
Issue #471, May 22, 2017

Issue #470, May 15, 2017

More on Buying Jewelry
Issue #469, May 08, 2017

Buying Jewelry: Gold, Diamonds and Pearls
Issue #468, April 30, 2017

Thomas Sowell: Part III of III
Issue #467, April 24, 2017

Thomas Sowell: Pat II of III
Issue #466, April 17, 2017

Live Close to Where You Work
Issue #465, April 10, 2017

Medtronic in Hospital Management
Issue #Interim Bulletin #464A, April 07, 2017

Thomas Sowell: Part I of II
Issue #464, April 03, 2017

A Political Contribution a an Investment: Part II of II
Issue #463, March 27, 2017

A Political Contribution as an Investment: Part I of II
Issue #462, March 20, 2017

Buffett Selling Vacation Home
Issue #461, March 13, 2017

Advanced Placement (AP) ourses
Issue #460, March 06, 2017

The Importance of a Credit History
Issue #459A, March 02, 2017

A Credit Card Scam
Issue #459, February 27, 2017

The Electronic Health Reord
Issue #458, February 20, 2017

Issue #457, February 13, 2017

Platinum and Palladium
Issue #456, February 06, 2017

Economic Outlook for 2017: Part II of II
Issue #455A, February 02, 2017

Economic Outlook for 2017: Part I of II
Issue #455, January 30, 2017

A Story From Vegas
Issue #454A, January 25, 2017

Land Donation Deals and the IRS
Issue #454, January 23, 2017

The Theory of Gambler’s Ruin
Issue #453, January 16, 2017

Student Loans: But Wait, There’s More!
Issue #452, January 13, 2017

A Second Home
Issue #Interim Bulletin #451A, January 04, 2017

The Consumer Confidence Index
Issue #451, January 02, 2017

Social Security
Issue #450, December 26, 2016

My Outlook for 2017: Part II of II
Issue #449, December 19, 2016

My Outlook for 2017: The Market
Issue #448, December 12, 2016

Medicine in 20 Years
Issue #447, December 05, 2016

Higher Interest Rates
Issue #446, November 28, 2016

Trump and the Markets: The Bad and Ugly
Issue #445A, November 23, 2016

Trump and the Markets: The Good
Issue #445, November 21, 2016

Negative Trends: The Suits aren’t Makin’ Steel
Issue #444, November 16, 2016

The New DOJ Fiduciary Rule
Issue #443, November 07, 2016

Barron’s Conference, Part IV of IV
Issue #442, October 31, 2016

Barron’s Conference, Part III of IV
Issue #Interim Bulletin #441A, October 26, 2016

Barron’s Conference, Part II of IV
Issue #441, October 24, 2016

Barron’s Conference, Part I of IV
Issue #440, October 20, 2016

This Newsletter
Issue #439A, October 12, 2016

Memoirs of US Grant: Vol II
Issue #439, October 10, 2016

More Points on Collecting, Investing and the Economy
Issue #Interim Bulletin #438A, October 05, 2016

Personal Memoirs of US Grant
Issue #438, October 03, 2016

Ideas for a High School Part-Time Job
Issue #Interim Bulletin #437A, September 29, 2016

Collecting, Investing, and the Economy
Issue #437, September 26, 2016

Free College
Issue #436A, September 22, 2016

A Military Commitment to Pay for Med School
Issue #436, September 19, 2016

When a CD isn’t a CD
Issue #435, September 12, 2016

I Made a Mistake
Issue #Interim Bulletin #434A, September 07, 2016

What is Your Spare Time Worth?
Issue #434, September 05, 2016

Credit Cards and Bonus/Loyalty Points
Issue #433, August 29, 2016

The Write-off of Student Loans
Issue #Interim Bulletin #432A, August 25, 2016

412 Retirement Plans
Issue #432, August 22, 2016

Join the Club
Issue #Interim Bulletin #431A, August 18, 2016

The Case for Precious Metals and Hard Assets
Issue #431, August 15, 2016

When the US went off the Silver Standard
Issue #430, August 08, 2016

Why NOT to Open a Restaurant
Issue #429, August 01, 2016

Some Tips on Life Insurance
Issue #428, July 25, 2016

More Observations on Negative Interest Rates
Issue #427, July 18, 2016

Issue #426, July 11, 2016

Is a PhD Worth It? Part II of II
Issue #425, July 04, 2016

Is a PhD Worth It? Part I of II
Issue #424, June 27, 2016

Avoid Part-time real Estate Agents
Issue #423, June 20, 2016

Issue #422, June 13, 2016

The Problem with Auction Reserves
Issue #421, June 06, 2016

Make Full Use of Your Capital Investments
Issue #420, May 30, 2016

The Fed’s Announcement
Issue #419, May 23, 2016

Quit While You’re Ahead: A True Story
Issue #418, May 16, 2016

The Precious Metals
Issue #417, May 09, 2016

Negative Secular Trends: Part Ii of II
Issue #416, May 02, 2016

Negative Secular Trends: Part I of II
Issue #415, April 25, 2016

Not Winning is not the same as not Losing
Issue #414, April 19, 2016

Behavioral Economics: Part II: Weaknesses
Issue #413, April 11, 2016

Behavioral Economics: Part I: Valid Points
Issue #412, April 04, 2016

The Most Important Books I’ve Read
Issue #411, March 28, 2016

Secret to Success: Take Risks and do Things Differently
Issue #410, March 21, 2016

The Over-Priced Food Presentation Hustle
Issue #409, March 14, 2016


By Robert M. Doroghazi, M.D., F.A.C.C.

What if the US Dollar Breaks to New Highs

Issue #393, November 23, 2015

    I reviewed the US Dollar Index in Issue #280 (9/23/13). It represents a basket of currencies with the following weights:
                      Euro                             57.6%
                      Japanese yen                     13.6%
                      British pound sterling           11.9%
                      Canadian dollar                   9.1%
                      Swedish krona                     4.2%
                      Swiss franc                       3.6%
    For practical purposes, the strength or weakness of the Euro determines the direction of the US Dollar. Because of a poor economy in the Euroland, the Euro is being purposefully weakened by the European Central Bank to improve exports. It currently stands at $1.07. It will almost certainly weaken to parity with the US Dollar. The same with Japan: their GDP has been negative for the last 2 quarters, so the dollar will also probably continue to strengthen against the yen. The Swiss recently weakened the franc.
    What will happen if the Dollar Index (see chart below) breaks above 100, out to new multi-year highs?
    1) It will be bad for commodities, since they are priced in dollars. Oil, copper, iron ore and other commodities are around 6 year lows. This is good for the purchasers of commodities in the US because they are cheaper. It is bad for those in the commodity business, such as the energy companies and the miners (although it is good for the oil refiners, such as Valero, VLO). It is also bad for the commodity-producing countries, from small, third-world countries, to the larger economies, such as Brazil, Australia and Canada (Note: the currencies of these 3 countries have been very weak).
    Unfortunately, it is especially bad for countries such as Russia, Venezuela, and almost everyone in the Middle East that are heavily dependent on oil revenues, because it could result in social and political instability.
    2) It will be bad for the precious metals. If the Dollar breaks out to the upside, gold will almost certainly be punished.
    3) The emerging economies will also be whacked because $9T of their debt is priced in dollars. Not only are these countries receiving less for the commodities they sell, but their debt load is increased: a really nasty double whammy (see below).
    4) How about the US stock market? Many of our largest companies, such as those in the DJIA and the S&P 500, are multi-national, and make a good percentage of their money overseas. Their earnings will be hurt.
    What about the overall market? It’s tough to say. Considering that at least part of the reason commodities are weak is because of slack demand. This means that companies’ earnings in general will be hurt. Remember also that I have written extensively over the last 2 months that I believe the market is topping/has topped out.
    5) How about interest rates (and your bond portfolio)? A weakening economy usually causes interest rates to fall. But as of late, interest rates have been trending higher, although they haven’t broken out yet. One reason the US Dollar is strengthening is because it may sense that the Fed will raise interest rates next month (the economy really can’t take it, but this is political: see below).
    6) Watch oil. If it drops below $40, then much of the above may come to pass. Likewise, there is a big political component to oil. Mr. Putin (according to Forbes, the most powerful man in the world) and the Saudis won’t let prices stay this low for long.
    If the dollar breaks to new highs and these things come to pass, the Fed will step in to weaken the dollar. That’s when commodities, especially gold, will reverse.
    Warren Buffett says that if there is one thing that a young businessman or woman should study, it is accounting.
    RMD comment: I absolutely agree. I’m on the Board of several non-profits, and marvel at how an experienced banker can look at a balance sheet and understand it immediately. It’s like a cardiologist looking at an EKG or a radiologist looking at a chest X-ray. Mayor Richard J. Daley could look at a balance sheet and know where every penny was (see American Pharaoh: Mayor Richard J. Daley: His Battle for Chicago and the Nation. Cohen and Taylor, 2000, Little-Brown).
    I think within the next few weeks I’ll talk about
    1) the absurdity of negative interest rates. Last week the Germans sold a 2-year note with a coupon (interest rate) of -0.38%. People willing pay the German government 38 basis points per year (a basis point is 1/100th of a percent) to hold their money. It makes no sense.
    2) Government student loan forgiveness, especially as it relates to physicians.
    I highly recommend The Wall Street Wars: The Epic Battles with Washington that Created the Modern Financial System (Farley, Regan Arts).
    “The “mission creep” of the Federal Reserve in the decades following Glass-Steagall would have had Carter Glass aghast (Glass also helped create the Fed). The Fed’s expansion into the financing of the national debt continued well after WW II. From LBJ’s “guns and butter” through Reagan’s tax cuts and bloated Pentagon budgets up to George W. Bush’s wars without taxes and his and Obama’s bailouts, the Fed has been the loyal agent of the US Treasury. And more—the Fed chairman has become our national Merlin, expected to work monetary magic by manipulating interest rates and money supply through gargantuan bond purchases (I had originally put gargantuan bong purchases. Good thing I proof this multiple times) to prop up the equity markets, goose economic growth, and achieve “optimal” levels of employment, as he (and now she) sees fit. The Fed’s “lender of last resort” function has also expanded far beyond its member commercial banks. It is expected to play matchmaker for failing Wall Street banks and insurance companies, using its balance sheet as a dowry. Carter Glass would have railed against all of this”.

    I again recommend Winter is Coming: Why Vladimir Putin and the Enemies of the Free World Must be Stopped (Kasparov, Public Affairs). Kasparov also mentions ISIS.
    RMD comment: ISIS reminds me of how Lt. Kyle Reese (played by Michael Biehn) described the Terminator (played by Arnold Schwarzenegger) to Sarah Connor (played by Linda Hamilton).
    “It can’t be reasoned with, it can’t be bargained with. It doesn’t feel pity or remorse or fear and it absolutely will not stop. Ever. Until you are dead!”   
    Whenever I see the word whammy, I think of pitcher Charles William “Whammy” Douglas. In 1959, the Topps baseball cards had a round picture of the player, with the rest of the card a single color. Cubs, Red Sox, green, Giants, Braves, Indians: yellow, Cardinals: some blue, some pink, Yankees, Tigers: red. Douglas was on the Reds, so his card was black. (Don’t you think the background should have been another color?)
    My paper “Hand Position over Face to Hide Cleft Lip” is in this month’s (November) The Medicine Journal of Medicine. E23.                       

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