Why the Dollar is Slipping and Navigating What’s Actually Moving Markets with Karen Finerman

Investors like Finerman suggest strategies for maintaining market positions during times of volatility and uncertainty, emphasizing the importance of a long-term, diversified approach and risk management through hedging.

Maintaining a Long-Term, Diversified Strategy Despite Short-Term Fluctuations

Investing Through Volatility Pays Off Long Term

Finerman shares that although market downturns, such as those caused by the pandemic or the great financial crisis, can be painful for those who are long on their investments, she maintains her established investment strategy. The difficulty of accurately timing the market keeps her vested in a long-term approach. She believes in buying during significant market downturns, echoing the adage to "buy when there's blood on the streets, even if it is your own." Finerman emphasizes that she consistently holds various hedges but remains net long in her positions.

Risk Monitoring and Hedge Adjustment Based On Market Conditions

Hedging With Options for Downside Protection and Upside Exposure

Karen Finerman speaks about adjusting her hedges, such as buying back short positions, during market volatility. She uses puts as a form of "insurance with a high deductible," offering protection if the market takes a considerable downturn—more than 5%. When the market declines and the puts increase in value, Finerman advises that it is time to sell them. However, she warns that the current unpredictable market is not the best environment for novice options investors to begin trading, especially with very risky zero-day options that expir ...

Karen Finerman sheds light on potentially undervalued stocks and the dynamics of luxury retail and its interplay with Chinese consumer behavior.

Evaluating Undervalued Companies Temporarily Depressed

Karen Finerman discusses two major companies, Amazon and Citigroup, which she believes are currently at attractive valuations.

Amazon and Citigroup Stocks Offer Attractive Valuations Relative to Long-Term Potential

Finerman holds a substantial position in Amazon, showing confidence in its potential, especially when the stock sees a downturn to around $172 or $173. She believes in Amazon's AI story, Amazon Web Services (AWS), and their sizeable retailing business. She highlights that Amazon is an attractive investment, particularly at the current price, and cites its strong balance sheet. Citing AWS and Amazon's "extraordinary retail business," she points out that Amazon is trading at an unusually low 28 times earnings.

Citigroup also draws Finerman's attention due to its significant valuation drop. She is optimistic about the multi-year efforts by CEO Jane Fraser to streamline the bank's operations and cut expenses, which is evidenced by the prospects of continued earnings improvements into 2025 and 2026. Finerman notes the protection government provides to strategically important financial institutions like Citigroup, implying they have a safety net. She finds Citigroup's valuation attractive and would consider buying its stock.

Assessing Risks and Opportunities in Luxury Retail and Chinese Consumers

Karen Finerman and Nicole Lapin analyze the luxury sector and the implications of tariffs on Chinese companies serving U.S. consumers.

Some Luxury Brands Struggle; Lvmh May Be Better Positioned

Lapin brings up luxury brands like LVMH and their recent performance. Finerman acknowledges the surprising contrast between American Express's success and LVMH's sales miss in the U.S. and Asia. She notes Kering's struggles, particularly with its flagship brand, Gucci. LVMH, on the other hand, led by the highly active CEO Bernard Arnault, seems better positioned when compared to Kering. Finerman favors LVMH over other luxury brands for potential investment.

Monitoring Tariff and Regulation Impacts on Chinese Companies Selling To Us Consumers

Discussing Dell, Finerman addresses concerns over tariffs and their impact on AI and data center components central to the company's core business, as well as the effect on the PC business. However, she points out that Alibaba is having ...

Nicole Lapin and her fellow podcasters investigate the recent weakening of the U.S. dollar and its implications.

Analyzing the Us Dollar Weakening Amid Market Turmoil

The podcast discusses the current financial climate, where the U.S. dollar has fallen by about 8% this year and is at a three-year low. An uncharacteristic economic pattern has emerged, with bond yields rising and the dollar falling against a backdrop where stocks are going down—a departure from the typical economic indicators interplay.

Factors in Dollar's Decline: Treasury Sales and Foreign Trade Unwinding

The panel explores factors contributing to the dollar's recent decline. The trend of treasury sales is cited as counterintuitive during a crisis when a flight to quality would normally lead to an increase in treasury purchases. Instead, people sold their bonds and when bond prices dropped, higher yields were needed to attract buyers. This sale of bonds and subsequent sale of the obtained dollars contributed to the weakening of the U.S. dollar.

Another factor was the unwinding of the Japanese yen carry trade as Japan raised interest rates, leading to an appreciation of the yen. The observed decline has raised questions about whether the U.S. dollar will continue to be the world's reserve currency.

Impacts of a Weaker Dollar on Us Consumers, Companies, and Government Debt Financing

The effects of the dollar's decrease are multifaceted, touching on every aspect from consumer purchasing power to government financing strategies.

Weaker Dollar Boosts Us Exports, Taxes American Consumers

A weaker dollar acts as a "silent tax" on American consumers by diminishing their purchasing power. This is because items from abroad become more expensive when the dollar's value drops. On the flipside, the falling dollar benefits U.S. exports by making American goods more affordable for ...