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Stock Ideas Top Headlines So, the weak dollar is good for business, huh?
Stock Ideas Top Headlines So, the weak dollar is good for business, huh? 
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| So, the weak dollar is good for business, huh? |
| Sunday, 07 October 2007 | ||||||||
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Chinese for messing with us by keeping their currency, the renminbi, pegged in a closed capital system against the US dollar. So we sent countless folks from the Federal Reserve and the Treasury Dept to scream at the boys in Beijing to allow the renminbi to float against the US dollar. And here at home, members of Congress (as well as wannabe members) have been doing their own Khruschev impersonations at the podium, banging their shoes and hollering about how the China was killing us with its overvalued currency. We got what we wished for. Not only is the US dollar now weaker (and still weakening) against the renminbi, it’s slipped against the euro, the pound, the franc and a lot of other currencies. Even Canada’s loonie is worth more than the greenback. (But don’t worry; they still charge more for everything up there because word hasn’t gotten around, or they don’t get it that we’ve reached parity.) Are we better off? We still spend the same on the goods we need, from crude to cars and everything in between. What we failed to note is that it’s not just about the currency. It’s about labor costs, supplies, environmental policies and a whole lot of other comparative economic advantages in a host of industries where we shouldn’t be operating. We’re still selling the stuff we sold before, but there’s one new market we’ve gotten into in a big way as the dollar’s done its slip-and-slide. It’s a fire sale for assets. New York properties: Bid ’em and buy ’em.Resource-rich lands from West Virginia to California: Bid ’em and buy ’em. And whole companies are finding themselves the targets of carpetbaggers with wheelbarrows full of cash ready to cut deals. We get to sell off who knows how many productive US companies to foreign-based businesses. A major stock exchange, the Nasdaq, was grabbed by Dubai, and this week Commerce Bancorp was snapped up by a Canada-based bank.Plenty of economies and markets around the world use the dollar as their actual or pegged currency. And deals are getting done in those jurisdictions as well; another Canadian bank took over a leading offshore bank in the Caribbean in a multibillion dollar deal. What’s in it for us? This is a good time to look around the markets at companies that have rich assets in the US ripe for buyout deals from abroad. Look at the common shares of COINMACH SERVICE CORP (AMEX: DRA) as well as its Income Deposit Security (AMEX: DRY). Coinmach is still in the process of being bought by BABCOCK & BROWN (Australia: BNB, OTC: BBNLF).The Australians are getting a simple, heavy-cash-generating business at a fire sale price made even better by the soft buck and the overvalued Aussie dollar.Some may complain that the deal is taking too long. But we say, Why not wait? We love the heavy dividend flows and the underlying assets. If Babcock walks for some reason, great; we get to keep it or sell it at an even higher price. The same can be said of a host of major, resource-rich publicly traded partnerships (PTPs) in the US market. From LINN ENERGY (NSDQ: LINE) to LEGACY RESERVES (NSDQ: LGCY), these gas and oil companies are being shuffled lower in the US market--even as commodity prices are on the up and up. With proven long-term reserves--all pumping now, not in some huckster promoter’s pipe dream--they’re ripe for being picked off from abroad. They’re made even cheaper by the softer US dollar. If you own ’em, keep ’em; if you don’t, don’t wait for some invader from abroad to pick them off at fire-sale prices.
And you get the hefty dividend flows while you wait. Source : Pay Me Weekly This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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