Did it ever occur to you that the weak dollar is biting you in the rear every time you put gas in your car? According to Rex Tillerson, the CEO of Exxon, oil is probably $20 higher than it would be otherwise because of the weakness in the dollar. In the meantime, the oil producers are so upset about the weak dollar that the Gulf Cooperation Council is thinking of ditching the dollar peg. We might have $2.25 gas in Southern California and a vastly lower cost of importing oil if the dollar were stronger. But, of course, the stronger dollar has its own set of consequences as well.
It’s always interesting to me how changing one little factor in global markets causes effects throughout the system. I’ve referred to it before as beanbag economics: when you smush down one part of the beanbag chair, it poofs out somewhere else. It’s the best argument for adopting a systematic investment process that is truly adaptive.
