Dollar Drops Amid Bets Fed Won’t Slow Stimulus Soon – Bloomberg 10-17-13

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Richard Fisher  at FRB of Dallas said fiscal discord has undermined the case for tapering bond purchases, which tend to debase the dollar.

Richard Franulovich at Westpac Banking said tapering is looking less and less likely, and sees an opportunity in the next few months for currencies and risk assets to rally across the board against the dollar.

The Bloomberg US Dollar Index breached its lower 20-day Bollinger band, signaling prices may have fallen too far, too fast.

David Bloom at HSBC said the market is getting grumpy with the dollar and is thinking, can the Fed taper this year, which looking less likely.

Kathleen Brooks at Forex.com said there is a lot of bullish sentiment toward the pound, driven by a weak tone in the dollar combined with the UK data.

Simon Smith at FxPro said the government deal was not good for the dollar as uncertainties over the debt ceiling and government shutdown are only delayed – it will be dollar-negative in the next 3 months.

Ric Deverell at Credit Suisse said all the silliness has pushed tapering out until at least Q1, meaning you don’t get a clear direction from the dollar until at least 2014.

Read the full article at http://www.bloomberg.com/news/2013-10-17/dollar-slides-amid-bets-fed-will-maintain-stimulus-franc-rises.html

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Investors Are Lab Rabbits in Central Bank Experiments – Bloomberg 07-28-13

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Vincent Reinhart at Morgan Stanley said investors are the little white lab rabbits in the central bank experiments.

Gilles Moec at Deutsche Bank said the potential for the dialog between the central banks and the market to fail is significant.

Nathan Sheets et al at Citigroup said the UK and euro region are adopting the Fed’s forward-guidance strategy in an effort to decouple their bond markets from that of the US, while the US economy is way ahead of those economies in terms of place in the business cycle and the strength of the recoveries. Sheets et al predict yields will average 1.8 percent on 10-yr German bunds and 2.75 percent on 10-yr UK gilts in Q4 2014, while the 10-yr T-note will average 3.25 percent in Q4 2014 compared.

David Bloom at HSBC sees the dollar powering ahead by the end of 2014, with sterling weakening to $1.45 and the euro falling below $1.25.

Over 50% of 43 economists predict the BOE will adopt a data-contingent form of communication, while 40% predict a calendar-based commitment.

Sven Jari Stehn at Goldman Sachs said Fed research has highlighted the importance of forward guidance in aiding the economy while de-emphasizing the role played by quantitative easing.

Jonathan Loynes at Capital Economics said central banks have no idea what will happen in the future, so to commit to a particular policy stance carries risks, including loss of credibility.

The IMF forecasts the euro economy will shrink 0.6 percent in 2013.

Azad Zangana at Schroder Investment Mgmt said the BoE is trying to address the pickup in yields without actually buying bonds, and while forward guidance has been successful so far, it’s pushed yields back down and limits to how far it can go.

Read the full article at  http://www.bloomberg.com/news/2013-07-28/investors-are-lab-rabbits-in-central-bank-experiments.html

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Euro, Pound to Slide on Central Bank Low-Rate Policies, UBS Says – Bloomberg 07-10-13

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Mansoor Mohi-uddin at UBS said the euro and pound will weaken to $1.20 and the pound will fall to $1.41, more than 3-year lows against the dollar, by year-end 2013 as the commitment by the ECB and the BoE to keep interest rates low for extended periods. Mohi-uddin said policy divergence across the central banks will strengthen the dollar because the ECB and BoE’s low interest-rate policies will induce risk-seeking investors to shun the euro and the pound in favor of higher-yielding foreign assets.

Read the full article at  http://www.bloomberg.com/news/2013-07-10/euro-pound-to-slide-on-central-bank-low-rate-policies-ubs-says.html

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Pound Seen at 4-Year Low by Morgan Stanley on Growth Outlook – Bloomberg 07-09-13

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Ian Stannard at Morgan Stanley says the British pound’s subdued response to recent signs of UK growth points to declines to $1.45 by the end of Q3 and to $1.41 by the end of 2013. Stannard said the UK services sector is the most important part of the UK economy though historically not enough to support the pound on its own.

Read the full article at  http://www.bloomberg.com/news/2013-07-09/pound-seen-tumbling-to-four-year-low-by-morgan-stanley-on-growth.html

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Pimco’s Amey Says U.K. Pound May Decline to $1.37 Under Carney – Bloomberg 05-29-13

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Michael Amey at Pimco said sell the pound as it may drop to a 4-year low of $1.37 during Mark Carney’s tenure at the BoE because he will want to see it decline, while a similar move against the euro is unlikely because of the euro bloc’s challenges. Amey said sterling can depreciate on a trade-weighted basis another 10 to 15 percent.

Read the full article at http://www.bloomberg.com/news/2013-05-29/pimco-s-amey-says-u-k-pound-may-decline-to-1-37-under-carney.html

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Murray International’s Stout Says Stocks Too Expensive – Bloomberg 05-24-13

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Bruce Stout at Aberdeen Asset Mgmt says:

  • Optimism is too high for stocks and bond yields are too low
  • His fund’s fixed-income holdings are at the lowest level in 25 years.
  • The main problem is trying to get yield in a world where there is no yield, but paying up for it is not the solution. The bond market is rigged as you cannot have the worst economic fundamentals of all time and record-low bond yields. Lending money to Westminster or Washington today at 2 percent is foolish.
  • The fundamentals supporting the British Pound are worse than they were 5 years ago and the enormous amount of QE has meant a huge expansion of the gilt market while their quality has deteriorated.

 

Goldman Sachs this week said the US stock-market rally may last at least another 2 1/2 years. Bill Gross at Pimco said two weeks ago that the 30-yr bull market in bonds has ended.

The MSCI World Index is at 17.1 times earnings versus 13.6 two years ago.

Read the full article at http://www.bloomberg.com/news/2013-05-23/bonds-rigged-as-stocks-expensive-for-scots-manager-doubling-fund.html

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Pound Slides Most in 6 Weeks Versus Dollar as Unemployment Rises – Bloomberg 04-17-13

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Arne Rasmussen at Danske Bank said the outlook for the UK economy and the pound are bad and today’s jobs data is disappointing. Rasmussen says investors should not underestimate the possibility the BOE will act aggressively to support growth, and expects the pound to fall much further.

Mike Amey at Pimco says they are underweight longer-maturity gilts because the 30-year gilt yield of 3.03 percent provides scant protection when inflation is taken into account.

Read the full article at http://www.bloomberg.com/news/2013-04-17/pound-slips-versus-euro-before-minutes-of-boe-s-policy-meeting.html

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Soros Sees China Shadow-Banking Risks Similar to Subprime – Bloomberg 04-08-13

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George Soros said:

  • China has a couple of years to control risks as t

    he rapid growth of shadow banking is disturbingly similar to the subprime-mortgage market in the US that caused the financial crisis of 2007-2008.

  • China can keep its current economic growth model for another year or two but not for another decade because household savings are no longer sufficient to subsidize the majority of the economy.
  • China is aware of the dangers and has succeeded in changing its growth model several times in its recent history, so is able to do it again with one caveat: vested interests are much stronger now than in previous occasions as the rapid expansion of shadow banking and its considerable influence over state-owned banks demonstrates.
  • 2014 will be turbulent with the euro at the center of the storm, and the decline in the yen and pound will probably aggravate the recession in Europe.

Shadow lending flourishes in China because 97 percent of its 42 million small businesses can’t get bank loans, and savers seek higher returns than lenders pay for deposits. UBS estimates the size of the total industry at 45 percent of GDP.

Read the full article at http://www.bloomberg.com/news/2013-04-08/soros-sees-china-shadow-banking-risk-matching-subprime.html

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Pound Extending Drop Leads Kames to Buy Treasuries Without Hedge – Bloomberg 03-12-13

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Stephen Jones at Kames Capital bought US Treasuries without a currency hedge, saying the pound will decline further against the dollar, and the prospect of the pound rallying is remote. Kames expects the Fed to keep its monetary stimulus.

Read the full article at http://www.bloomberg.com/news/2013-03-13/pound-extending-drop-leads-kames-to-buy-treasuries-without-hedge.html

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Pound Slides to Lowest Since 2010 Versus Dollar on U.S. Payrolls – Bloomberg 03-08-13

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Neil Jones at Mizuho Corporate Bank said people are looking to buy the dollar against the most vulnerable currencies, currently the pound and yen. Jones cited much uncertainty about the U.K. economic outlook.

Scott Thiel at BlackRock  said it sold the Pound after the Bank of England left its asset-purchase program unchanged, citing Britain’s struggle to stimulate growth and maintain a cohesive message, consistently above-target inflation, and London’s waning dominance as an international business center.

Jim O’Neill at Goldman Sachs said Cameron’s commitment to cutting Britain’s debt is not working and leaving Britain in a similar position to the weaker euro-area nations. O’Neill said it is unclear what further BOE asset-buying stimulus would do to improve the U.K. economy as the weak pound is increasing import costs and cramping consumers.

Read the full article at http://www.bloomberg.com/news/2013-03-08/pound-strengthens-against-euro-climbing-from-near-16-month-low.html

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