Wednesday, October 7, 2015

Société Générale's Albert Edwards: Emerging Market Currencies Will Fall As US, Euro Economies Collapse

The Japanese should be able to beat the Germans in this race to the bottom.
From ValueWalk:
In the most recent installment of looming trial and tribulation from Societe Generale's Albert Edwards, the Prince of Doom and Gloom argues that the Bank of Japan is likely to boost its QE program again soon, leading to a collapse in the yen and a rout in emerging market currencies. Edwards also suggests that continuing anemic U.S. inflation means the economy remains stuck in neutral.
Albert Edwards
Even though the sky is not falling yet, according to Albert Edwards' October 7th Global Strategy Weekly, there are good reasons to expect it might fall tomorrow or the next day: "The first was more soggy Japanese economic data which suggests that the BoJ may soon hit the QE button even harder. That would trigger a renewed slide in the yen and another round of Asian currency turmoil – plus ça change! But, secondly and perhaps more important is increasing evidence of a loss of confidence that the Fed is actually in control. Ignore for a moment the stock market’s celebration of weaker than expected payrolls. Instead investors should focus on the rapid decline in US inflation expectations since the Fed meeting – even now converging to dire eurozone levels!"
Albert Edwards says Japan-style deflation is on the horizon for U.S. and Europe
Albert Edwards
Edwards argues that Japan is at a crucial crossroads. Given nearly all of the recent economic data on the Japanese economy have been disturbingly weak, most analysts are now expect the BoJ to notably boost its QE program (QQE as it is known in Japan, having thrown in qualitative with their quantitative easing).