David Bloom: 'Is There a Bigger Armageddon Out There?'

Investors are afraid of “Armageddon” in foreign exchange markets due to concerns beyond the Greek debt crisis and sluggish US growth, David Bloom global head of foreign exchange at HSBC told CNBC Thursday.

Bloom described the Greek sovereign debt crisis as “yesterday’s news” for foreign exchange markets, adding fresh worries were spooking investors following Federal Reserve chairman Ben Bernanke’s downgrade of US economic growth prospects for the year and his silence over further fiscal stimulus measures.

“Today’s news is will (the US) do (Quantitative Easing) and then is the UK falling apart? This is the problem that we’ve got... this is the problem that I’ve got with currencies, there’s no doubt about it that (the euro zone) is trying to cause a delay and people honestly believe in their hearts that at some stage they’re going to have to take a haircut on Greece, but is there a bigger Armageddon out there?” Bloom asked.

He added that in addition to persistent worries over the Greek crisis and the US economy, China was a fresh cause for concern.

“We’ve got the possibility of QE in the UK, there’s massive change in growth numbers in the US and now people are starting to worry about China,” he explained.

“You saw PMI numbers showing some weakness and actually Chinese interbank interest rates are going up quite substantially, so people are starting to get quite worried,” he added.

Bloom said that technical factors in the market caused “everyone to think it’s Armageddon out there” and he warned that investors were trading on fear resulting in “a bear market in ideas”.

“We’re not in the business of solving things in the long term at the moment, we don’t know the answer. If we all could agree on a common framework and a common answer that would be fine,” Bloom told CNBC.

“Everybody can’t take pain, so as soon as you start making a loss you abandon that idea, so there’s a complete bear market in ideas, we’re scared and we’re afraid in the financial markets, we’re not these brave big guys with white socks that we made out to be, people are cowering under their desks at the moment,” he added.