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I.N.O. chief strategist Adam Hewison and Leader Capital CEO John Lekas give their outlook for currencies.
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Well here you go the dollar continuing its hot streak against the yen as the G-20 opens the door to an all out currency war.
Joining me now got out and he was sent on yeah.
Chief strategist and of course John like as leader capital CEO an atom and good luck to both it would start with you though.
I even G-20.
Basically gave permission to Japan and other members to pursue policies that would weekend.
Their currencies -- it doesn't have this kind of behavior is gonna pose a threat to global.
And even US growth at first why is that not a concern white and the G-20 over the weekend -- make no war what we're seeing around the world.
I think the G-20 basically thank you GGG.
She -- has basically been ignoring but it's ignored by most people are really isn't that important anymore in the world currency markets because the currencies tend to -- doing whatever -- wanna do.
They're looking at the -- -- in dollar yen relationship we see that we simply -- still going higher on that front pony to a hundred it's being never fought.
It's gonna go there -- gain.
The -- -- -- Japanese yen was way way too in my opinion wouldn't see the dollar improvement in but the some other currencies are very much in the news.
I think probably interest into.
You could look at the Euro and you could look at the Swiss franc for example to the right better -- -- mind my feeling.
-- I -- say at what our viewers -- currency markets are open today has the fact that we're talking about this and John the Euro and the dollar actually stronger today.
Vs the yen in particular because I don't know the Japanese kinda got away with a little -- over the weekend many years sank.
-- -- talk about the dollar to you John because this if this affects American companies this affects our economy.
The dollar over the last three months.
Up about 15%.
Vs the -- Against -- another story John.
-- -- dollar this does Ben Bernanke deflationary.
Environment.
Is this stifling growth in the United States.
It is gonna -- growth you -- states but look.
Bombed the problem here -- Japan is really simple they don't want another Greece.
In Japan's running about 200% that debt to GDP and they just can't have a they can have Japan implode so very good they're gonna we've given that relief.
And politically in order do that they have to be impartial and sort of do for everybody was that mean for the US -- means the dollar goes up.
Means our exports weighing.
It means but they also means commodity prices go a little lower so it's sort of a mixed bag -- but ultimately is gonna Hurd the domestic.
You know the economy however.
You know -- you know terms of the stock market which I think your viewers making interest today and I think that.
-- with the S&P garnering about 60% of its growth overseas.
Probably.
You know helped earnings growth in the S&P and I think the equity market probably continues to march on war.
What does out of -- is -- -- currency strategist sonatas a stock picker but yet to his point I think we all can kind of agree here that if you look at major US multinationals they do grow.
Other earnings to grow their revenues through grow.
Because of the weaker dollar that's a bonus for them but again inflation if we get -- -- -- early next year -- and this is where the Japanese have had some this steps out and that's -- you get into problems has that the worries about a currency war happening around the world.
Well I think to go back to the stock markets from whom we actually approach the markets on a technical basis and we've been very bullish on the US stock market all the world -- actually going higher.
The same time pretty much but the US markets were looking for the S&P 500 for example to go to the 1515 to 16100 we're looking for the down to go to -- 164166.
From this current move but I generally think we're gonna see the currencies.
Really continue to erode on the against the dollar for the most part the Japanese incidents special sort of side market and I think we'll see those markets really kind of weaken against the the yen though the dollar rather in this case.
Right what you guys at Citi dot I mean look I mean luckily the that the European situation has improved.
Over the last few months in Spain really dodging a bullet with their economy.
Over the weekend we got some -- actually this morning on Spain but at the same time John.
Just basic question basic question if the Euro is if the euros down the dollars down the yen is down.
But there's still growth in these economies.
Doing -- a positive here.
What look longer in a positive but also like to give you caveat here.
-- look -- the dollar moving up -- that the correlation to the you know rising dollar vs the stock market.
It's definitely a negative correlation so.
I think the dollar moving up here.
-- plus -- sequestering that's common.
It's probably gonna give the stock market short run pretty good punch in the nose.
I think we get about a 10% correction in the next thirty days here that -- -- call I know it I don't like making short term calls like out -- -- -- you think we get that and I think technically to Adam's point.
We need to -- -- the gun your little bit technically.
To move through these highs soy do you think that that is an order but again I think buy the dips here is.
Has Bennett has been a good team and I think that'll continue so I think in the short run for your viewers.
You know you you might wanna -- cautious.
Our viewers -- -- make -- money on the markets open tomorrow gentlemen and that's how we're talking about this today that day currency market itself won't fund business up -- real quick yes.
Yeah I'd say we're bearish on the dollar except against the yen a packed our it will -- to -- -- thank you very much for being here appreciate it thanks gentlemen thank you very much.
