By Economic Forecasts & Opinions
Société Générale (SocGen), France’s second-biggest bank, has told its clients to be bullish on commodities, stay with stocks and "anything but cash" in 2010. SocGen's Chief Strategist Alain Bokobza spoke to CNBC on Jan. 11, 2010 about the investment strategy.
Fear of Double Dip to Prevent Bond Crash
Bokobza sees an ongoing momentum for growth in the U.S. with employment growth, as well as the emerging economies. The consensus seems to be we are heading towards a bond market crash in 2010; nevertheless, fear of a double-dip will prevent a bond market crash. The U.S. Federal Reserve and G4 countries are expected to stay on a near-zero interest rate for much longer than expected, which makes yield curve play attractive.
Yen - The Carry Trade Currency
Bokobza expects the U.S. Federal Reserve and the ECB to announce this summer that the monetary tightening process will start at the end of 2010 or in Q1 of 2011. At the time of the announcement, i.e., this summer, carry trade will begin to switch from Dollar to Yen.
Overall, the Dollar is expected to be fairly flat against the Euro by the end of this year; however, Yen, as the new major carry trade currency, would fall "massively".
SocGen's Main Advice For 2010
With near-zero interest rates, getting out of cash and into other riskier assets such as equities or commodities should be the strategy this year.
- Anything but cash
- Stay in equities
- Expect rising M&A cycles
- No bond market crash
- Yen carry-trade
- Be a commodity bull
Refer to SocGen's Cross Asset Research Report dated Jan. 4, 2010 from Scribd.com HERE for full commentary and recommendations.