According to Kirby Daley, Senior Strategist at the Newedge Group, markets may now “drift down quietly” till the year end though there may not be a sell-off. Dollar strength could be story of 2010, Is it the end of the dollar's decline?
It’s turning out to be a quiet — and tiring — end to the year for equities, a year that ironically saw one of the biggest rally seen in recent times. Stocks in emerging market economies as well the developed world including the US have seen a sharp rally from the March lows when markets bottomed out in the wake of the financial crisis.
According to Kirby Daley, Senior Strategist at the Newedge Group, markets may now “drift down quietly” till the year end though there may not be a sell-off. “We remain sceptical on the markets globally, and also of the sustainability of the economic recovery if the government stimulus is withdrawn,” he said.
Daley added that the recent strength seen in the US dollar against a basket of other currencies may continue and could be “the story of 2010”. That may be come as bad news for emerging markets and commodities as it is generally perceived a weaker dollar tends to be better for these asset classes.
Here is a verbatim transcript of an exclusive interview with Kirby Daley on
CNBC-TV18. Also watch the accompanying video.
Q: Do you think the market weakness is linked to the snapback in the dollar or is there something else driving it?
A: It’s just a general wind down to the end of the year. I do not think there is any impetus after the strong performance of markets overall this year to rally into the year-end. I think the rather the more logical scenario was people to take some profits, take some money off the table and I expected a very quiet drift into the new year and it looks like that’s what we are getting. There is a lot of conflicting news out there, some positive economic signs - they can be interpreted both ways.
Until investors come back fresh in the new year getting new perspective we are probably unlikely to see any major swings in markets. I do not think that there is anything overwhelming negative that’s going to spark a sell-off but I do think that the markets are a bit tired after the excessive run that they have had.
Q: How high would you rate the outside chances of a sharp cut because through last week a couple of Asian markets like ours actually lost quite a bit?
A: The risk is to the downside. The investors need to be aware of that even though we probably are unlikely to see any major move that doesn’t mean that there couldn’t be shock to the system whether it’s geopolitical or whatever the event maybe that could spark an event. There is a far higher chance of something sparking a large sell off in most markets then there is if any good news coming out would cause a rally that it would get away from investors. So as a trader or investor you need to keep that in mind. The risk is far more to a downside sell off than to any type of a rally upwards from here.
It’s turning out to be a quiet — and tiring — end to the year for equities, a year that ironically saw one of the biggest rally seen in recent times. Stocks in emerging market economies as well the developed world including the US have seen a sharp rally from the March lows when markets bottomed out in the wake of the financial crisis.
According to Kirby Daley, Senior Strategist at the Newedge Group, markets may now “drift down quietly” till the year end though there may not be a sell-off. “We remain sceptical on the markets globally, and also of the sustainability of the economic recovery if the government stimulus is withdrawn,” he said.
Daley added that the recent strength seen in the US dollar against a basket of other currencies may continue and could be “the story of 2010”. That may be come as bad news for emerging markets and commodities as it is generally perceived a weaker dollar tends to be better for these asset classes.
Here is a verbatim transcript of an exclusive interview with Kirby Daley on
CNBC-TV18. Also watch the accompanying video.
Q: Do you think the market weakness is linked to the snapback in the dollar or is there something else driving it?
A: It’s just a general wind down to the end of the year. I do not think there is any impetus after the strong performance of markets overall this year to rally into the year-end. I think the rather the more logical scenario was people to take some profits, take some money off the table and I expected a very quiet drift into the new year and it looks like that’s what we are getting. There is a lot of conflicting news out there, some positive economic signs - they can be interpreted both ways.
Until investors come back fresh in the new year getting new perspective we are probably unlikely to see any major swings in markets. I do not think that there is anything overwhelming negative that’s going to spark a sell-off but I do think that the markets are a bit tired after the excessive run that they have had.
Q: How high would you rate the outside chances of a sharp cut because through last week a couple of Asian markets like ours actually lost quite a bit?
A: The risk is to the downside. The investors need to be aware of that even though we probably are unlikely to see any major move that doesn’t mean that there couldn’t be shock to the system whether it’s geopolitical or whatever the event maybe that could spark an event. There is a far higher chance of something sparking a large sell off in most markets then there is if any good news coming out would cause a rally that it would get away from investors. So as a trader or investor you need to keep that in mind. The risk is far more to a downside sell off than to any type of a rally upwards from here.
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