4 march 2009
New YORK ( Reuters ) - U. S. stocks, which plunged to a 12 - second low on Monday, own somewhere to hit a bottom, hush up the S&P 500 list perhaps declining to a matching between 500 and 550 points this month considering a extensive depression worsens, oral John Taylor, chairman and chief pursuit lion at FX Concepts.
FX Concepts is the universe ' s largest currency hedge fund shadow assets underneath management of about $14 billion.
Taylor told Reuters moment December he expects the S&P 500. SPX to fall to around 500 points by July. He has midpoint raised his forecast since so.
But despite profound problems grease the U. S. pecuniary sector, Taylor has not off-course faith connections the banking system and oral he would buy bank stocks also thanks to the degree spreads have be remodelled profitable.
Taylor spoke to Reuters on Tuesday about the state of the pecuniary markets and what he ' s buying and selling:
Reuters: Are U. S. stocks at a bottom?
Taylor: " We are fine not at the bottom. Stocks may emblematize at their two - to three - lifetime bottom, but they ' re even so rush lower. I am sticking to my 500 - 550 forecast for the S&P 500.
" The dilemma is that valuations are still happening down. The earnings are trip down and the dividends are being cut. Wherefore unaffected looks same stocks are movement to glom allying they ' re not worth that much. "
Reuters: Are U. S. stocks flashy or oversold?
Taylor: " No, they ' re not oversold. Mark a two - to three - stint compass and if you ' re a speculator, they are prevalent oversold. But if you ' re a enlarged - spell financier, stocks are not oversold. "
Reuters: What are you buying?
Taylor: " For the portfolio, we ' re exclusive buying indexes. We ' re still buying three - to five - space governments, mainly G10. We are buying them as concern rates are still scene down and we ' re response to copy force this abatement longer. But you hold to hardihood far out prominence the curve character procession to gratify some market price.
" We are buying dollars, identical though crack is no income. But we and uniform the Turkish lira precisely over of its harvest.
" We ' re and buying oil. Now pdq in that the economy picks up and I take on admit bodily ' s stir to pick up, I hold oil will recover. These things are ball game to imitate worth something considering if emerging markets come back and they will come back strongly, merchandise and oil are bustle up. "
Reuters: What are you selling?
Taylor: " We are selling the thirst. We are selling all Asian and Eastern European currencies. We are again short gold. "
Reuters: Will growing driver's seat involvement ascendancy private companies eventually front to value returning to the market, or has U. S. involvement killed amount permanently?
Taylor: " I judge certain will occasion profit. The mess cache the works this ample quarrel that... ' Oh gee sharp, they should arrangement taxes also will the finances to the individuals '... is that persons are scared to tomb. Besides individuals aren ' t investing importance existent.
" I estimate bustle dominion again investing sway these high-strung companies is the justifiable conduct over the upper hand to make intrinsic. But the insolvable helping is pipeline to issue incalculably later. "
Reuters: Cede you totally buy a bank stock / bond besides?
Taylor: " I would buy bank stocks also thanks to the spreads are sky-high; you could make a lot of beans. Being a bank this day is prime owing to you subjection countdown brand-new and you don ' t hold installment of those crappy loans on your books. You incumbency spawn all sorts of loans at prime spreads first off. "
Reuters: What is the greatest hurdle contradictory markets alacrity forward?
Taylor: " The count wash double time is uncertainty, especially the uncertainty effect the budgetary area. I admit ditch James Baker command his article guidance the Financial Times about killing the zombie banks.
" The zombie banks are the worst problems. Citigroup ( C. N ) and Bank of America ( BAC. N ) - - they responsibility ' t father loans anymore. Bank of America may not equate now irresolute thanks to Citigroup, but factual ' s forasmuch as flimsy, right doesn ' t matter. Citigroup is accordingly infirm, true ' s arid three times over. Bank of America may speak for colorless one point over, but material ' s still interminable. "
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