Some Thoughts On The US Dollar

This is something we need to talk about.

First, let me start by admitting that I don't know what is going to happen tomorrow, next week, next month, or even later today. I have no idea what the price of anything is going to be in the future. And I'm okay with saying that because no one else does either, regardless of how enthusiastic they might seem about their "calls".

With that said, what's up with the United States Dollar? You guys know that I look at currencies and commodities and global indexes the same way I look at the S&P500 and $AAPL. To me it's all just letters and math. No emotions with me. So yes, for years and years I've tracked the US Dollar and if/when I see something I'll comment on it like I would any stock or US index. But whenever I've ever said anything about the Dollar, no one has cared. Literally, no one. I say one bad thing about Bank of America, however, and the hate mail comes flooding in. That's just the way it is.

These days every email or phone call that I get from media outlets is about the US Dollar. I've never ever seen anything like this. We've gone from an asset no one cares about, because it's not "sexy", to everything that moves is because of the US Dollar. I'm amazed. I really am.

We all know that "news" follows price. That's obvious. But this is now getting ridiculous. The US Dollar has gone parabolic. Fine. But now it has to be the topic of every conversation? Funny, last May when I loved the US Dollar no one cared. No one. Not a single person. Now? Everyone.

I'm not saying that we have to short the US Dollar today, or tomorrow or ever. But anecdotally I've never seen such consensus bullishness towards US Dollars. The actual data we look at suggests the exact same thing as we are at the most bullish sentiment levels on record while commercial hedgers, or the "smart money", are hedging like if the Dollar is going to zero. Something's up guys.

I was at a happy hour this week with some really smart guys. You know a lot of them, but I'm not going to mention any names. The Dollar was the topic of conversation....shocking I know.

Here's what I think: Wisdomtree has made quite the name for itself by creating vehicles where investors can profit from a particular country's increasing stock market prices, while at the same time providing a hedge against that nations deteriorating currency. Japan in 2013 and Europe more recently are good examples. The symbols are $DXJ and $HEDJ which go long Japan & Europe respectively, while hedging against their falling currencies, Yen and Euro. These ETFs have both given investors incredible returns. They have done much much better than their Dollar denominated counterparts like $EWJ or $FEZ for example, which mirror similar indexes, but without the currency hedge.

I think the next one is the hedged United States ETF. People think I'm crazy. I probably am, but for other reasons. But this one is coming.

Just thinking out loud here, but I really do think this is going to be a big winner at some point in the near future. I hope Wisdomtree is listening. Give it the ticker symbol $SPXJ. I'm in.

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Tags: $SPY $DXJ $EWJ $FEZ $HEDJ $UUP $DX_F $WETF