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Why the U.S. dollar is strongest in two decades compared to the euro - YouTube
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well we are following some good news on
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wall street the stock market had its
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best day in nearly a month yesterday the
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dow gained 754 points and the nasdaq is
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up 353 with the s p 500 taking in
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105 points a little bit of good news
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netflix has reported its second quarter
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earnings for 2022 and the streaming
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platform lost nearly a million
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subscribers but that's good news too
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because it's a smaller loss than the 2
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million it had projected netflix stock
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jumped 5.6 in trading after markets
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closed yesterday
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and i asked you this question yesterday
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i get to ask it again today are you
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feeling lucky well the mega millions
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lottery has soared to at least 630
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million dollars after no winning tickets
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sold for the 555 million dollar jackpot
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yesterday uh that was the jackpot
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yesterday the next drawing will be
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friday and it could be the fifth biggest
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jackpot in mega millions history
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alright well inflation may be soaring
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but you know what else is soaring the
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u.s dollar as well is that good should
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we be concerned here to discuss the
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current state of the us dollar is joe
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renison he's a markets reporter and deal
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book writer for the new york times uh
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great to have you here so
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first off let's just give us a sense of
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where the dollar currently stands and
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how it compares to other major
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currencies like the euro and the yen
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sure um so the dollar is
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very strong that's the takeaway uh it's
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at its strongest in about two decades
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when you compare it to a basket of its
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kind of major
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uh trading partners that would include
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the euro it would include the yen as
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well uh in terms of the euro that's the
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one a lot of people have been talking
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about especially last week because we
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kind of hit
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parity uh for the first time in a long
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while uh so that's where the dollar is
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worth the same amount
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as the euro
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for the yen i believe we're at roughly a
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sort of 20 24 year low so again over
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roughly two decades
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uh yeah so the upshot the dollar is very
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strong so then how do i interpret this
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what does that mean when we're talking
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about the state of the global economy
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yeah sure
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so
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there's a few reasons why this is
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happening now one of which is the fed
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and how the fed has moved a little more
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quickly a little more aggressively than
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other central banks around the world
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to
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combat inflation and raise interest
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rates uh to do so and what that does is
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it makes even relatively safe assets
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like u.s treasuries uh you know gives
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them a higher return and that draws in
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capital it draws in investors from
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around the world looking to earn that
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higher return when you know by and large
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around the world interest rates are
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still fairly low uh and those kind of uh
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coupons that you can earn the yield that
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you can earn uh on bonds around the
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world uh is less the other reason is the
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you know whilst americans might not be
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feeling like this right now with the
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sort of rampant inflation that we have
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and the economy starting to slow down
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uh the us is doing better than a lot of
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the rest of the world and as a result
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again the dollar becomes this kind of
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haven currency it becomes a safe place
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for investors for people to hide out
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whilst there's a lot of volatility
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elsewhere
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um so you know you talked about
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inflation at first i thought to myself
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oh maybe that's good for inflation
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because that means the american dollar
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goes further but it doesn't really have
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much of an impact on inflation does it
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uh or does it i i wouldn't put it quite
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like that i mean i i that i take the
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point that you're making which is the
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again i i i imagine
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a lot of people will find it strange
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that we're talking about how strong the
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dollar is when people's own spending
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power people's own ability to go out and
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buy things
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is decreasing um because of the
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inflationary effect raising the cost
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raising the price of things we're
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talking about a slightly different way
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in which the dollar is strong and that's
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in its comparison to countries uh and
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currencies abroad just really quickly if
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interest rates go up again which it
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looks like they will will that have an
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impact on the dollar
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yeah uh i mean it
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it
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quite possibly will again kind of
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strengthening or reinforcing that
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dynamic that i sort of mentioned earlier
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whereby u.s assets start to look even
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more attractive to investors wanting to
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earn a little bit more
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of a return again and you you don't have
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to be going into the stock market to do
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that you don't have to be going into
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high-yield bonds or things like that um
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you can do that just by just by buying
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treasuries
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fascinating stuff you've offered me some
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clarity joe renison thank you very much
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thank you
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