Archives of “House of Morgan” tag

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US dollar crash is virtually inevitable says Stephen Roach

  
  Analysis
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Roach is a former Morgan Stanley Asia chairman and is now a senior fellow at Yale University.

  • “The U.S. economy has been afflicted with some significant macro imbalances for a long time, namely a very low domestic savings rate and a chronic current account deficit”
  •  “The dollar is going to fall very, very sharply.”
Roach spoke in an interview with CNBC, called for a 35% fall in the dollar.
  • “These problems are going from bad to worse as we blow out the fiscal deficit in the years ahead”
He has further reasons too, here is the link

JP Morgan’s Dimon sees financial stress similar to the global financial crisis ahead

  
  Analysis
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Jamie Dimon is chief executive officer of JPMorgan Chase & Co.

On the coronavirus pandemic:
  • “At a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008” 
  • More specifically for his firm, JPM earnings this year will be “down meaningfully”
  • 180,000, or about 70%, of the firm’s employees are working from home
  • JPM is paying around $1,000 to those whose jobs don’t allow them to work remotely
Adds:
  • people could return to work more quickly if governments made tests widely available
  • to determine who has recovered from the disease
  • “The country was not adequately prepared for this pandemic,”

Dimon is correct on the unpreparedness. Three months of denial from the very top of the US administration that there was even a problem has cause such a tragic escalation in the numbers of lives lost.

Dollar weakness among the trends to watch for next year – Morgan Stanley

  
Analysis, Forex
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Strategists at Morgan Stanley view that betting on a weaker dollar will be among the top trades for 2020

Dollar

In a client note detailing the trends to keep an eye out for next year, strategists at the firm view that the dollar is to be hit by stronger global growth outside of the US and dwindling portfolio inflows.

They argue that the greenback will fall against the pound, euro and kiwi dollar while also recommending to short the dollar against the Indian rupee in the EM space.
GBP/USD
Cable should “rally sharply by Q1 2020 as an orderly Brexit path becomes clearer, prompting foreigners to lift their GBP hedges and invest in undervalued GBP assets”. Target 1.40 in Q1 2020 before ending 2020 at 1.35.
EUR/USD
“Narrowing US-Europe growth differentials” and improving political factors should see the euro rally against the dollar. Target Q1 2020 and end of the year at 1.16.
NZD/USD
Recommends taking up a long position in the pair as they see Chinese and global growth improving. Target of 0.69 by mid-2020.

JP Morgan think progress in US-China talks is unlikely

  
  Analysis
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JP Morgan on the upcoming talks between the US and China.

  • We are more sceptical
  • still see risks to our growth outlook for 2H 2019 skewed to the downside
JPM that a deal could be struck at the ministerial level talks in mid-Oct and “activity get a cyclical bounce into year end”. But:
  • “Are either likely? No.”
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Based on what we have seen come out of US-China talks so far I find it difficult to disagree with JPM.

Time to dust off the ‘hawkish cut’ outlook – September FOMC to lift the USD

  
  Analysis
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Morgan Stanley expect the sept September meeting of the Federal Open Market Committee to cut

  • by 25bp
  • But the dot plot published alongside is unlikely to show more rate cuts for the balance of 2019 and into next
  • expects confusing dots reflecting diversity of views on the committee
More:
  • ” …. FOMC materials are likely to be insufficiently dovish to meet the market’s lofty expectations”
  • “USD is likely to outperform on the day, particularly against risk-sensitive currencies like high-yielding EM FX and the dollar bloc” 
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