For the last several months, I’ve talked about the weak U.S. dollar and the effect it’s having on the stock market. Sometimes, this is a difficult concept to convey in concrete terms because we don’t see the immediate effects of a weak currency. But make no mistake, what happens in the currency trading pits has a major impact, not only in the markets, but in the broader economy as well.
Here’s a good example. Mercedes has announced that it will start shifting more production to the United States from Germany. Why? It’s due to the benefits of a weak U.S. dollar. The move will make the automaker less vulnerable to swings in the currency markets. The company estimates that C-Class Mercedes made in the U.S. will cost 2,000 euros than one made in Germany. Mercedes isn’t alone. BMW also said that it’s increasing production in its plants in South Carolina. I expect to see more news items like this.