Tags: Morgan | Stanley | Dollar | Comeback

Morgan Stanley: Dollar Poised for Huge Comeback

Tuesday, 17 Aug 2010 09:53 AM

Everyone is underestimating the U.S. economy, says Morgan Stanley analyst Stephen Hull, which perfectly positions the dollar for a huge comeback.

“We are constructive on the dollar because we think that the bad economic news is already reflected in the price,” Hull wrote in a note to investors. “Despite the soft patch in Q2 we expect the economy to rebound in Q3 and to grow by 3.5 percent.”

Hull points to easing financial conditions such as plunging mortgage rates and rising stock prices after the tightening that accompanied the European sovereign crisis, gradually firming domestic demand and income as evidence of his position.

In addition, Hull notes, personal savings rates have been boosted during the last two years, suggesting that consumers have rebuilt their balance sheets to some degree so they could spend more of their income in the second half.

“We also expect an extension of unemployment insurance benefits and aid to state and local governments worth $60 billion to add to income and confidence … and expect Congress to extend most of the tax provisions that expire at year-end,” Hull says.

Bloomberg reports that inventories at U.S. businesses rose in June at a faster pace, propelled by a surge at retailers that indicates companies may need to cut prices to clear out merchandise as demand slows.

Others also think the dollar is ready to soar.

The U.S. dollar will rebound from its recent slump but while the global economy slides back into recession, predicts John Taylor, head of FX Concepts, the world’s largest currency hedge fund with $7.5 billion in assets.

© 2017 Newsmax Finance. All rights reserved.

 
1Like our page
2Share
StreetTalk
Everyone is underestimating the U.S. economy, says Morgan Stanley analyst Stephen Hull, which perfectly positions the dollar for a huge comeback. We are constructive on the dollar because we think that the bad economic news is already reflected in the price, Hull wrote...
Morgan,Stanley,Dollar,Comeback
263
2010-53-17
Tuesday, 17 Aug 2010 09:53 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved