Yesterday’s message looked at the demographic fact
population is getting younger. It was suggested
that a new baby boom
may be the answer to the baby boomer retirement, Social Security and
Medicaid problem. Armed with new technology, the new workers will
bring productivity that can run future governments and pay off
This growth surge could push real estate prices even higher. Yesterday’s
USA Today article "Population boom spawns
cities" says that America’s "population is booming, development
sprawling and the economy is globalizing." It points out America has
295 million people but “braces for another 125 million people by
Look at the numbers. 125 million over 45 years translates into nearly
3 million more people a year or about the amount of people in Atlanta
and its ten county surrounding metropolitan area. In other words, we
have to build an Atlanta (and surrounds) each year for the next 45
years. Perhaps the real estate book is at least partially justified.
Yet there is a gap. Boomers start retiring in 2012. The new wave of
youth does not really take hold until 2030. This gives us some
First, we may currently want to invest in other currencies.
European and Japanese fertility rates have fallen. By 2040 or even
sooner, the U.S. population will overtake Europe's. In 1950 Europe had
twice the population of the U.S. This does not bode economically well
for Europe (or the aging Japan).
However in the short term, before the falling fertility makes the
dollar stronger, our extra youth won't come into play. The baby boomer wave came
because America won WWII. Japan and Germany lost that war so
they did not have the same trend. This means that America will have a
sudden retiree problem ahead of Europe and Japan.
The dollar is currently enjoying a (in my opinion) short term upswing
which creates good opportunity to switch into other currencies such as
the euro, British pound, Swedish, Norwegian and Danish kroner, plus
Australian and New Zealand and Icelandic dollar (yielding up to 9%).
Some of the eastern European currencies now offer potential and higher
interest rates. For example Hungarian florin investment grade bonds
now yield over 6%. For example anHUF 6,25% Hungary Government bond
that matures 12.06.2007 is priced at 99.86 and yields 6.3%.
The Icelandic dollar also looks interesting. An ISK 0,00%
Iceland t-notes that matures 09.02.2007 is priced at 87.50 and
Jyske Bank is very bullish on the ZAR (South African rand) because the
ZAR corrected from 5.71 in the beginning of March 2005 to 6.83 today,
which is a correction of approximately 19%.
A AAA rated ZAR 7% KFW bond that matures 15.04. 2008 is priced at
100.05 and yields 7.21%.
South Africa reduced its interest rates in April, but there is
political pressure for further cuts which is one reason for the
correction in the ZAR.
For more information on such bonds contact Thomas Fischer at FISCHER@jyskebank.dk
There will be other great investing opportunities created by this new
wave. We’ll look at more of them tomorrow.
Until then, good international investing to you.
P.S. Learn more about how to invest in currencies over
ahead. Join currency expert Thomas Fischer, Merri and
me as we look at
how to invest and do business abroad. DETAILS