Europe Economy

SquawkBack Europe: The Great Unloved

Stephen Sedgwick,|CNBC Anchor

Who are the people we love to hate? Yes, of course real estate agents, parking wardens, any Government of the day and journalists all get repeat votes in the professional ugly contest. These days, though, it’s a no-brainer who tops the list:  Dastardly Bankers!

They have leapfrogged every other profession as the favorite whipping boys of society, so much so that many of our guests on the show take offense to the association. Without naming names, one of my guests (who works for one of the oldest banks in the book) corrected me live on air the other day.

“Firstly, I am an asset-manager, NOT a banker. Now, in answer to your question…”

Our guest host on Squawk Box Europe Wednesday was the excellent David Bloom. Bloom, forex guru at HSBC, always elicits good two-way opinion and for a while he was feeing a bit put upon by the e-mail traffic he generated.

Paul accused David of “talking his book,” adding:

“Perhaps HSBC should be reducing their position in the euro and buy food stamps.”

Balance was restored by David M in his mail entitled The Great Unloved:

“To stop today’s guest feeling put upon, and on a lighter note, do you know what accountants, economists and chartists have in common? They all use historic data to predict the future. No wonder they get so many predictions wrong.”

“Perhaps today’s guest should bear this in mind, but in all fairness he is good value, even if he does make me spill my tea at times.”

Make no mistake, to be a good guest host you have to be able to take it on the chin and Bloom has uncompromising views on how “ugly” the dollar, sterling, euro and yen could perform. He says the headwinds are huge and that the best long forex opportunities lie in emerging rather than G10 currencies.

Al in Santa Monica bit immediately:

“Please have Bloom back in December of 2010 so he can toast the near parity the dollar will have with the euro at that time. Cheers!”

Rob in Spain couldn’t be more diametrically opposed to Al:

“I think, considering the supply of US dollars being thrown at the market since the crisis that we should reach $2 to the euro and not parity.”

Carlo in New York finds David’s observations on the dollar especially refreshing:

“The US dollar is over-held, overbought, and the Fed is adding more liquidity than ever, and just looking at the US dollar and its issuance on a global-GDP-weighed basis, and from a commodity financing point of view, and from a trade-weighted basis, there is only one way for the greenback, which is down.”

Meanwhile, it’s hard to find someone out there without a strong opinion on where we go economically and in the markets this year. What happened to pragmatism? Ok, I hear you saying: “That’s a bit rich coming from you, the original Mr. Black and White.”

Kit Juckes of the ECU Group sent an e-mail today that was refreshing in its honesty:

Rubbish weather again this morning, and little in the way of eco news to help get markets excited. I have struggled for inspiration so far this year, as I sense most markets are trading ranges more than trends.”

On to the big topics of the day and China has hit the headlines today not only because of its bank capital tightening but more controversially on the back of Google claims of censorship and cyber attacks.

Chinese tightening is a thorny topic for the markets to digest. The PBOC’s hiking of reserve ratio requirements was only a matter of time. Regular Guest Host Sean Corrigan’s ‘Material Evidence’ arrives in my inbox, highlighting some grave concerns:

“IF, and we have to underline the conditional at this early juncture, IF China is serious about reigning in its incipient price explosion, and IF, as is likely, the past year’s mal-investment boom therefore comes crashing down, all the potential output of that excess capacity will be anxiously looking for buyers outside the country’s borders.”

Sean adds this apple cart could upset global economy: “… the fate of the ‘recovery’ everywhere could rest very much upon what Beijing next decides to do and when.”

On Google’s threats to walk out on China unless “Internet Freedom” is respected, Carlos in Milwaukee believes the internet giant may be making a giant error:

“Google’s reckless decision to even remotely think of pulling out of China will hurt the Internet giant undoubtedly. Maybe Google should make sure that this wasn’t just some rogue hackers trying to make a name for themselves.”

Of course, Google’s stand looks courageous but with the likes of Yahoo, Microsoft, domestic players such as Baidu champing at the bit to fill any market share vacated it will be a costly withdrawal if carried out.

Still, no story these days seems to be more than a couple of degrees of separation away from those Dastardly Bankers and Google is no exception, at least not for PJ:

“Aren't we all screaming about ‘immoral, unethical’ behavior of big banks? When you sell your soul to make money, you pay the price. Google and Yahoo must choose: the 'right' way, or the Chinese way.

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