The editors past right and wrong market views
Dear Reader,
To give you a feeling for the background of my views, I have highlighted a few of my right and wrongs from the last couple of years.
EUR/USD: Until spring 2006 I was bearish on EUR/USD but as it broke 1,2550 I turned around. It was also based on weakening US fundamentals, particularly the softer housing market, first signs of a stagflation risk and a potential oil crisis in the cards. For obvious reasons I have kept that view since. My first target was 1,3650, then 1,4600, then 1,5400. The current targets you find on the front page.
Japan and UK: I thought the Japanese economic upswing, starting for some years ago, should lead to rate hikes from Bank of Japan and a stronger Yen, but that surely didn’t happen. The UK economic trend was ok to find. For both Japan and UK I belonged to the camp who thought that the upswing would last and be a global counterweight to the negative consequences of the US slowdown. It was a surprise that the Japanese and UK economies simply turned around last autumn. Thereafter it was very easy to see how bad the situation would be.
Equities: In the start of 2007 several of the very large funds argued that the major indices should correct downwards with 10%. I agreed, but the first 9 months of 2007 were pretty painful. I agreed so much that I privately didn’t have had any shares in my portfolio since end of 2006 – only cash. This is still the case.
Oil: The International Energy Agency (IEA) for long time ago warned that oil could reach $100 per barrel. That was to expect, but that oil came up to around $150 was beyond my imagination.
Inflation and interest rates: Based on the above views it was to expect that inflation should up. I didn’t thought that ECB had the guts to hike from 4,00% to 4,25% in July 2008, but that long interest rates should move upwards was easier to catch.
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