Will the rest of 2007 be a continued global upside for the economic growth and the financial market?
If the US gets its soft landing and Asia keeps on moving it will. Europe will most likely take on some of the pushing from the US in 2007.
The market of 2007 will consider the global stock market on a macroeconomic level and currencies that have become a subject for even “non investors” which is somewhat a new phenomenon.
The landing in May 2006 was hard and a period of possibilities for short term investors to make good money and long term investors to just hold on and try to focus on the underlying trend and economic growth of the global economy. We are in the beginning of 2007 back in the global uptrend we been in for almost 4 years.
Global Stock market
This part will consider regions as the US, Europe, the Nordic region, Eastern Europe, South America and Asia. A strong global growth have been moving almost all markets to good result for 2006 and below is quick overview of areas for the 2007.
The Nordic region, Europe, South America (focus on Brazil), Eastern Europe (Turkey excluded) and China have strong momentum in the beginning of 2007. India is still showing great strength but the valuation is getting a bit provocative. When in comes to wild cards in the 2007 South Korea is a strong candidate considering valuation.
Currency
This part will foremost consider an overview of the trends for the dollar against the Euro and emerging market currencies. I have during 2006 been arguing to go short dollar and I think at this point that 2007 will be another year when it is possible to make money going short the dollar.
The US trade deficit have for years been one of the strongest arguments for the dollar to come off. The main focus for the dollar to keep on coming off in the year 2007 is mainly the strength of the economic growth and the interest cycle in most other parts of the world is better off than in the US.
The strong growth in the emerging markets and the “healthy” weakness in the US growth are going to keep on pressure the dollar. The FED have during 2006 fighting the weak dollar by moving the interest to 5,25%, both growth data and inflation indicates that the phase of increasing the interest is close to an end, in 2007 the dollar will not have that help from the FED.
The expectations for the interest in the European Union is that ECB will gradually moving up from 3,50% and several emerging markets is as well expected to increase the interest and that will theoretical move money from the US in to these currencies that are in the beginning of a interest increasing cycle. There is a similar trend when it comes to Japan, the second biggest stock market in the world, where Bank of Japan for the first time in 6 years increased the interest in mid 2006.
The trend in 2007, when it comes to growth, is that Europe and most emerging markets is expecting to be stronger than in the US. The productivity in the US have the last couple of years been better than in other parts of the world but 2007 there is expectations that Europe , as an example, will be strong when it comes to productivity.
Another aspect when it comes to currency is what will happen if China will start selling dollar, this is an area that might be discussed later on during 2007. There is as well in the cards that China will strengthen the currency minimum 5%, that will not help the dollar.
To sum up this part there might be still interesting to go short dollar in 2007.
If the US gets its soft landing and Asia keeps on moving it will. Europe will most likely take on some of the pushing from the US in 2007.
The market of 2007 will consider the global stock market on a macroeconomic level and currencies that have become a subject for even “non investors” which is somewhat a new phenomenon.
The landing in May 2006 was hard and a period of possibilities for short term investors to make good money and long term investors to just hold on and try to focus on the underlying trend and economic growth of the global economy. We are in the beginning of 2007 back in the global uptrend we been in for almost 4 years.
Global Stock market
This part will consider regions as the US, Europe, the Nordic region, Eastern Europe, South America and Asia. A strong global growth have been moving almost all markets to good result for 2006 and below is quick overview of areas for the 2007.
The Nordic region, Europe, South America (focus on Brazil), Eastern Europe (Turkey excluded) and China have strong momentum in the beginning of 2007. India is still showing great strength but the valuation is getting a bit provocative. When in comes to wild cards in the 2007 South Korea is a strong candidate considering valuation.
Currency
This part will foremost consider an overview of the trends for the dollar against the Euro and emerging market currencies. I have during 2006 been arguing to go short dollar and I think at this point that 2007 will be another year when it is possible to make money going short the dollar.
The US trade deficit have for years been one of the strongest arguments for the dollar to come off. The main focus for the dollar to keep on coming off in the year 2007 is mainly the strength of the economic growth and the interest cycle in most other parts of the world is better off than in the US.
The strong growth in the emerging markets and the “healthy” weakness in the US growth are going to keep on pressure the dollar. The FED have during 2006 fighting the weak dollar by moving the interest to 5,25%, both growth data and inflation indicates that the phase of increasing the interest is close to an end, in 2007 the dollar will not have that help from the FED.
The expectations for the interest in the European Union is that ECB will gradually moving up from 3,50% and several emerging markets is as well expected to increase the interest and that will theoretical move money from the US in to these currencies that are in the beginning of a interest increasing cycle. There is a similar trend when it comes to Japan, the second biggest stock market in the world, where Bank of Japan for the first time in 6 years increased the interest in mid 2006.
The trend in 2007, when it comes to growth, is that Europe and most emerging markets is expecting to be stronger than in the US. The productivity in the US have the last couple of years been better than in other parts of the world but 2007 there is expectations that Europe , as an example, will be strong when it comes to productivity.
Another aspect when it comes to currency is what will happen if China will start selling dollar, this is an area that might be discussed later on during 2007. There is as well in the cards that China will strengthen the currency minimum 5%, that will not help the dollar.
To sum up this part there might be still interesting to go short dollar in 2007.
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