We are told that inflation is too low that it’s intolerable, even though our grocery bills keep going up, portions of meals keep getting smaller in restaurants, and gas price is back to 2007 level. But then, of course, core inflation excludes food and energy, as none of the fed chairmen need to eat or use transportation like most of their countrymen do. We are also told that prices will not increase due to a struggling economy, and public universities across the nation responded by hiking tuitions, some by 20%, since governments do not need to abide basic economic rules. Regardless, armed with a helicopter and a printing press, the fed set out to fight low inflation and to revive the economy (again!) with $600 billion QE2, and the dollar became a laughing stock.
With everybody losing faith in the dollar, the dollar trade might be getting lopsided, and a rally could be coming. Nonetheless, no one wants to get in the way of a helicopter, so any rally will probably be short-lived. With the dollar staying low, US exporting companies with profits measured in dollars can get quite a boost on their top and bottom lines. So, let’s take a look if one of the largest exporting can benefit from the weak dollar:
Boeing (NYSE: BA) is one of the largest exporters of the US. After all the consolidation and bankruptcies in the past decades, there are only two large commercial aircraft companies nowadays, Boeing and Airbus.
With each aircraft costing hundreds of millions, currencies matter a lot to their customers. With a weak dollar, Boeing gained a powerful competitive advantage. The recent Airbus accidents only served to help Boeing as well. The weak dollar also helped in directly hot money to emerging economies, propping up growth and demand for domestic and international travel.
Currently the main concern on Boeing is its decline in defense business. With a congress grid-locked by democrats controlling the senate, and republicans now controlling the house, the defense business of Boeing may get a chance of not getting affected as much going forward. If the defense business stabilizes, Boeing could have a joyride as long as the dollar stays low.
Boeing might be famous for making aircrafts, but don’t underestimate how a helicopter in the fed can benefit this company.
This article originally appeared in Benzinga.com