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Axel Merk, Merk Investments president and CIO, on how to properly play currencies in today’s headline-driven markets.
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Major market -- so how can you play currencies in this headline driven marketplace.
Let's bring -- bring in a currency expert joining us now is Axel Merck chief investment officer for -- investment.
Axel wonderful see you again -- for investors you advise currency market is an excellent way to -- policy moves -- -- -- on that.
Please.
Ensure in in recent years we have been spending trillions printing trillions and of course when -- and then to -- to ten dollars.
Asset prices and moving -- problem as.
Everything is moving in parallel and also -- you don't invest in the stock anyone based on the fundamentals -- typically investment because of the next perceived stimulus.
And our view -- -- -- why get paid on the equity risk.
When you can express what we call is the main -- policy makers in the currency markets.
If you print more money while laws -- -- currency is going to weaken.
And you might as well by another currency -- always think currencies are so volatile but even today when tomorrow will be your -- quite significantly.
On a percentage basis and number is very little happy if evident that a stock fumble among -- to 131 so and nobody's even gonna blink about it.
But we say following the dollar at least for a -- is a little bit tricky right now because to your point the feds indicted so that weakens the dollar but then considering all the troubles.
In -- you have.
A flight to quality into the US dollar.
How do you navigator forecast for the dollar's going what we look what applicable.
Things -- that there is no such thing anymore as a safe asset and we have been advocating basket of currencies taking a diversified approach is coming in -- name is cash.
That's what the Chinese Central Bank is doing their diversifying their reserves because they don't trust any one currency.
And as far the -- kind of sound.
Yes we've had these risk on risk off periods when the flight to quality comes to the dollar but what about money comes back to the US dollar it appears to be coming to -- -- so.
We deteriorating to balance sheet of the federal government at a faster pace than other governments doing -- world and then also when you have a crisis has -- patched up.
So when risk is back on when money goes back into risky assets.
More money that's it stuck to get stock in those risky assets and then the next time does risk aversion not as much money goes back into the US so obviously you can be a short term -- a long term investor.
But the currency market is something that there's usually.
On the represented an investor -- -- and it might that some some value.
-- that I wanna go back axle to your point about there are no more safe assets anymore.
If that is the case why are US treasury yields at these historic lows and can't seem to budge from these -- Both safe and Elvis always a question of what do you perceive it is it -- treasuries yielding 2% going to protect your purchasing power over the next ten yes.
If you think they well by all means look no further but if you think that your cost of living will go up and one and 2% to yield in the next ten years.
Then just maybe you have to look elsewhere to get sophisticated as not a problem that the people who had really.
And -- out in this environment -- the folks who are doing what they're supposed to be doing not just -- saving prudently.
And so by by moving to -- national cash -- example -- taking on currency risk but do we need to do what is precisely because.
The people think given that a printing press in the US than you have in other countries got -- RE Axel mark thanks a lot have a good weekend.
My --
