Should We Take Giselle's Financial Advice?

By now, most market watchers have probably seen the comments from supermodel--I've always been intrigued by that term...what separates a regular model from a super one? Better yet is when they refer to themselves as one: "What do you do?" "I'm a supermodel..." but I digress--Giselle Bundchen demanding that she be paid in Euros instead of U.S. dollars.

Good idea, bad? Maybe one could say it represents wise diversification if she ties up permanently with quarterback Tom Brady since he's paid his millions in U.S. dollars (are they still on? pardon if I'm behind the curve, Hollywood gossip isn't my area of expertise), but in reality it reminds of something else, an article I wrote in early 2005, right in front of a multi-month advance in the U.S. dollar.

The point of that article? Just like today, everyone at that time--literally everyone--was certain the dollar was headed lower. Of course, the Greenback proceeded to rally nearly 15% in 2005.

Now, I have to admit that today, with "Helicopter Ben" spinning his propeller and foolishly cutting interest rates, it feels like we may well be on the verge of a dollar crisis, but keep in mind two things:

• 1) That's how trends feel before they turn: like a sure thing
• 2) It's wise not to bet all of one's money on an event that can only happen once

At Delta Global, the majority of the dollars we run are in international markets so we look a lot smarter when foreign currencies rally but really, if Giselle Bundchen is bearish on the U.S. dollar, then being short the Greenback has to be a very crowded trade.

I warned of this build up of negative dollar sentiment a couple weeks ago so I was early then and, actually, it still feels like I'm a bit early (I'm waiting for an upside blowoff in silver to mark the end of this precious metals rally/dollar fall), but I doubt Bundchen's statement represents a dollar bear market in its early stages.

Technology

Standing in direct opposition to investors' views on the U.S. dollar, apparently, is the market's sentiment toward technology.

Last week, for example, the tech-heavy NASDAQ index outperformed the Dow and S&P 500, as it has been doing consistently in recent weeks. While both of the more "senior" market indices were down nearly 2% on the week, including the one-day highlight decline of more than 350 points on the Dow, the NASDAQ managed to put in small positive performance for the week (+.22%).

Interestingly, despite this obvious change in market leadership, the Investment News reported the following: Advisers, analysts ponder another tech bust, its headline blared. Apparently everyone still remembers the NASDAQ tech bust more than the boom that preceded it. That's bullish.

So, let's see: Giselle likes the Euro and industry pros are afraid of technology.

Hmmm... think I'll take a closer look at tech.

Comments

[Jack K]

Thanks for the timing. Sometimes one can get caught up in hysteria. Giselle is probably quite smart, and as I am a Pats fan, I think quite lucky, but when everyone knows something, it can't last.

[kurt walter]

I am sure someone told her to buy Euros. Anyway, buy DBV, FXA, FXC, FXE and FXF.. there, you are covered. Next ....