Currently, USD fixed deposits are offering high yield, so I am guessing USD is going to fall, is this logical? This is why I converted all my USD to SGD in interactive brokers and plan to open SGD Fixed deposit.
U.S. dollar fixed deposits are not, in fact, offering a “high” yield. Higher, yes, but they’re coming off record lows.
According to DepositAccounts.com right now, the highest one year Certificate of Deposit (without strings attached, such as age limits or co-deposit requirements) is paying 2.85% APY. Please note that interest is taxable as ordinary income in the United States (and to U.S. persons), and that’s a pre-tax figure. For somebody in a middle tax bracket — the 24% tax bracket, for example — and living in a state with no state income tax, that’s equivalent to about 2.17% APY. Singapore’s highest 12 month fixed deposit rate is currently 1.98% (ICBC, with one minor string attached). Big difference? No.
You forgot about the tax adjustment, even if you looked at the headline rates, didn’t you? Well, now you know. If you’re going to gamble like this (not recommended), a lot more homework is required.
CD interest is NOT taxable if the CD is held by a non-U.S. person (and not effectively connected to the U.S.), but the overwhelming majority of CDs are held by U.S. persons — something like 99%, I’d guess, since it’s really, really hard for non-U.S. persons to open CDs. So the tax correction is fair, and 24% is a pretty conservative correction.
I am terrible timer, so I understand markets can continue chugging up from here too. It is just that I don't want to risk it.
However, there’s big risk in hoarding Singapore dollars when your retirement won’t involve Singapore dollars. You can assume a lower risk (and lower yielding) posture if you wish — not a recommendation — but exclusively or predominantly in Singapore dollar denominated instruments doesn’t seem to make sense to me in your situation.
I am just wondering at what point US record debt load and it's deficits will hit it's ratings.
The U.S. doesn’t have a record debt load. The U.S. federal government is currently running large fiscal deficits, but it also has one of the lowest (if not the lowest) total tax burdens in the OECD and tremendous untapped taxing power. Financial markets are, correctly, taking all that into account.
Japan has a far bigger debt load than any country in the world, and (contrary to popular belief) a substantial chunk of it is foreign held. It also has a stable currency and ridiculously low interest rates, and it’s the third largest economy in the world.
If you want to advance some debt load theory, you have to explain Japan.
2) Stocks rise in the longer term because of earnings potential and valuations. Not so much on FX movements. Short to mid term wise probably they have a relationship.
And bear in mind that Wall Street is simply a place to plant a flag, an excellent one. The fact a stock is listed and traded in New York, and quoted in U.S. dollars, has no bearing whatsoever on where it conducts its business, makes its sales, and generates its profits — and in what currency(ies). We live in a world with mostly free movement of capital, including to/from Wall Street. Wall Street is already substantially decoupled from “Main Street” (the real U.S. economy) and getting more decoupled every day. Of course, the U.S. is the world’s largest economy, and thus it has an outsized effect on the rest of the world. The Global Financial Crisis demonstrated that fact quite well.
If you are a not a trader, I don't think it's necessary to speculate the impact of FX on stocks which are denominated in major currencies.
Right. Equities are not currencies. You could list and quote General Electric in South African rand, for example, and that still wouldn’t make GE stock comparable to rand correlated instruments, such as rand-denominated bonds.
if USD falls , US stock market goes up.
Other things being equal, exactly. It’s the same with, for example, oil. Oil is listed, quoted, and traded in U.S. dollars, but if the U.S. dollar falls then oil prices rise to compensate. Oil is not U.S. dollars either.
OK, it’s a little more complicated because other things are not quite equal. A currency moves for certain reasons, and those reasons can have other impacts. Also, the U.S. both produces and consumes a lot of oil, so wobbles in the U.S. dollar can affect oil production and oil demand (both).
Or maybe you can study the product characteristics more carefully.
