Now’s the time to get the hell out of the United States…
You see, the euro is approaching $1.05, and I think it’s headed lower still. We could see it reach parity with the U.S. dollar by the end of next month!
The drop is pushing the European market to the edge of a rally.
That means this spring and summer will be the perfect time to give you and your portfolio a European vacation.
Dropping to Meet the Dollar
Anyone who’s been on a trip to Europe in the last decade will tell you that the prices for normal goods and services were absurdly high due to the strength of the euro against the dollar.
There’s a layer of value-added taxes that are built into prices, of course. But even after accounting for that, the price of a Big Mac meal in France should never have been more than 50% higher than in the United States.
But today, the price of a Big Mac meal in Paris is 8 euros, or around US$8.40. That’s still about 40% more than in Middle America, but not too much higher than in New York City. This drop is because the currency is returning to a reasonable level.
I really thought it would take a few more months, but the downward trend is so pronounced, we could see the euro touch parity with the U.S. dollar by the end of next month. The last time the euro traded at this level was in 2003.
But, hold on, could the euro go even lower?
The lowest the euro has ever been against the dollar was $0.83 in 2000 – the year after it was introduced.
It may not get all the way down there again, but chances are it will trade below parity before recovering.
And, why not? Even now, the euro is overvalued. The best way to get economies moving is to make them cheap to foreign capital, which then comes in and spends money on goods and services locally, as well as exports.
The chart below shows that the next support level is around $1.03, and then below $1.
Take Your Change Across the Pond
The cheapening of the euro is something right out of the United States’ playbook.
For decades, we let the dollar fall, resulting in massive foreign investment in property, corporations, goods, and services.
The favor is now being returned, and the biggest beneficiaries will be European companies. That’s where you should be focusing a portion of your investment dollars.
One vehicle for taking advantage of the coming boom in European stocks is the low-cost Spider Euro Stoxx 50 ETF (FEZ), which gives you exposure to the Euro Stoxx 50 Index, made up of 50 of the largest and most-liquid stocks in Europe.
Markets tend to overcorrect both to the upside and the downside, and currency markets are no different. A cheap euro and cheap interest rates are the right fuel for a European mega market rally.
And the chase continues,
|P.S. Investing in European stocks isn’t the only way to take advantage of an outside currency. Wall Street Daily Founder Robert Williams recently discovered a new currency that could take on Bitcoin. Click here for more information.|