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Sell Dollar as US Influence Ebbs: Fund Manager

Thursday, 19 May 2011 | 8:48 AM ET

The recent rally for the dollar will not last and should be used as a chance to short the greenback as America’s geopolitical influence ebbs away, according to David Murrin, a hedge fund manager and author of Breaking the Code of History

Dollar and Euro
Dollar and Euro

"US political influence ebbs by the day and unlike the UK, which handed the burden of empire to the US, America cannot pass on the responsibilities of being the West’s policeman to anyone." said Murrin, who runs the Emergent Asset Management fund.

As President Barack Obama prepares to make a landmark speech on US policy in the Middle-East, Murrin said his decision to cut $400 billion from the defense budget was the wrong call.

"The commitment to cut $400 billion from the US defence budget at a time when the appraisal of the new Chinese J20 fighter as regional game changer in the strategic balance suggests that madness is infectious; he must have been spending too much time with (UK Prime Minister) David Cameron," Murrin said.

The UK prime minister's decision to cut back on UK defense spending and then commit Britain to the Libya conflict was a mistake in Murrin’s view.

"Civil war in the Middle-East rumbles on. The battle between the conservatives and those wanting change will hit US influence in the region and put the Saudis under pressure,” he said.

With US government debt at high levels, Murrin believes there is only one way to bring it down.

"American debts will continue to increase unless it comes to simple conclusion that default is inevitable. Better to choose the moment than have the moment forced upon one by one’s greatest strategic adversary, the Chinese,” Murrin said.

Murrin is bearish on stocks, telling CNBC that European stocks are the worst of a bad bunch. “The potential for growth versus global inflation is weak,” he said.

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