Dollar rally isn't over yet: Hoenig

Back in August, Jonathan Hoenig of CapitalistPig.com said investors would be well-suited to take a look at the PowerShares U.S. Dollar Bullish ETF (UUP). Since that call, the fund has surged more than 7%. So is the dollar’s moment in the spotlight over?

“For a decade plus we’ve been used to hearing about a weak dollar,” Hoenig said when we followed up on his previous call. “That trend has reversed. The dollar is strong against the Yen, against the Euro, against the commodities markets, and because trends tend to persist I don’t think you get off this dollar bull trend just yet.”

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What’s behind the continued strength of the greenback? “Sometimes investing is like working for the mob,” Hoenig jokes. “You don’t want to ask too many questions.” He adds that sometimes the trend itself is the reason it persists and he believes as rates, especially short term rates, tick higher, more investors will pile into the dollar

This continued trend has other implications Hoenig wants investors to note. “I think most investors want to keep an eye on their foreign stock exposure, which is dramatically underperforming,” he points out. “Over the last decade a lot of people have bought foreign-oriented investments in hopes of having higher returns, higher yields. That trend is over.”

The new trend, a strong dollar, should force investors to take a look at domestic plays again and avoid emerging markets and other foreign bets.

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