Currency Wars

Sep 29, 2022 | Finconomics 101, No Bull Economics


The unique aspect of currency valuations is that they represent a zero-sum game: our currency can only be stronger relative to your weaker currency.

The US Dollar has been trending higher against European & even Chinese currencies. This is a function of the Fed’s aggressive rate hikes which are attracting foreign investors who are converting their domestic currency holdings into higher-yielding dollar-denominated bonds. A defense of the dollar represents the only plausible explanation of why the Fed has been hiking rates – it is certainly not to slow consumer demand during a recession.

In the meantime, European currencies have become a mess after a series of sanctions against Russia inadvertently ended up punishing the continent. Now without access to its primary fuel supplier (Russia), economic conditions have become dire. Further, a drop in the Euro makes imports that much more expensive, adding to already overwhelming inflationary pressures. To make matters worse, the UK decided to cut taxes while simultaneously increasing debt-funded government spending, adding even more downward pressure on the British Pound.

The Chinese Yuan has even moved lower against the dollar given an unexplainable zero covid lockdown policy which has shut down the country’s industrial production.

The US is currently winning the currency war which is necessary for the US Dollar to retain its status as the global currency reserve. It is important to understand that this objective is currently more important to the US government than any risk of recession.  

US Dollar Euro Graph

Follow us on LinkedInTwitterFacebook, and YouTube!

Disclaimer of Liability
No Bull Economics
Restaurant Research

Email Sign-up

Jack in the Box Corporate Insights

Jack in the Box results reflected an improvement in: dining room openings (60% of system); innovation, upsell & add-ons sales; digital progress which is helping frequency; and late-night.

How to Circumvent Food Shortages?

The vulnerabilities of a long-distance supply chain have become very evident over the last couple of years, especially when it comes to farming.

This Week in Summary 11/18/2022

We want to spotlight Target this week which provides valuable insight on consumer spending.

How Would You Value the Federal Reserve?

Here is an idea: let’s take the Federal Reserve public in the world’s largest IPO.

How to Pass Along Inflationary Costs Without Losing Traffic?

Wendy’s is avoiding standardized menu price increases and turning to strategic increases designed not to price out lower income consumers.

Investors in Retail Stocks Think Consumers are Back

Recent retail stock gains would suggest that investors are confident in consumer strength, despite continuing inflationary issues.

Papa John’s & Chili’s Reveal the Plight of Cash Strapped Consumers

The relevant question remains whether consumers who are increasingly cash-strapped can be convinced to pay more for higher quality levels?

This Week in Summary 11/11/2022

Market melt up & the midterm elections

DoorDash’s Grip on Labor Costs is Funding New Investments

Doordash’s platform generated +10% of all restaurant industry sales.

3Q Results for Bloomin’, Texas Roadhouse & Cheesecake

Full serve restaurant sales performance is currently a function of customer demographics.

Digital Marketing Opportunities
Restaurant Research

A Restaurant Research LLC Company