• Clifford Bennett, Chief Economist | World’s most accurate currency forecaster at ACY


• 13.04.2022 05:00 pm
#stocks , Clifford Bennett has over 36 years of market trading experience and was named the 'World's most accurate currency forecaster' by Bloomberg New York. He has advised some of the world's largest organisations, billionaire investors, and political leaders and spoken at the prestigious APEC summit on reserve currency issues. Clifford is the Chief Economist at ACY Securities.

The good news, is that China will begin to come out of lockdowns at some point, and there will be an injection of stimulus of some form by the authorities to reboot communities and the economy.

The light at the end of the tunnel is reasonably bright for China.

Do not expect a return to rampant growth however. We have been forecasting for a year now that the China miracle growth period was well and truly behind us. China has now entered a mature capitalist system phase in many ways. This means growth rates of 2% to 5% are the new norm. Permanently. This is the point many economists and commentators are missing. For China, in coincidence with Covid, this is not a temporary set back. This is a mature system permanent reset to lower levels of growth.

There is no cause for panic here. This is only as expected. The historical shift from agrarian to modern consumer capitalism has been nothing short of spectacular. The world can only congratulate and applaud China on this truly impressive achievement. It has been one of the main drivers of global poverty having halved in absolute terms over the past two decades.

Now though, if as we should, we accept on-going firm to strong overall growth over the coming decade, but no where near the rates of the previous decade, then we indeed have a handle on how things are going to progress and can position our global investment portfolios accordingly. The Yuan will continue to firm as an equal alternative to both the Euro and the US dollar as a reserve currency alternative or addition in the long term.

For the moment, and I would say for the next year at least, the Euro will remain under pressure. Both directly from the war in Ukraine and indirectly via inflation driving US interest rates sky high.

Overall, expect the US dollar to continue to the big lead for the remainder of this year.

My forecast for the Euro for this year remains a collapse through parity to around 0.97.

Europe will likely be in recession/risk depression for the foreseeable future. Government stimulus measures that may occur in Europe will do little to reassure concerned consumers and business managers alike. Energy prices, even scarcity at times, and of course food prices as well as supply chain disruptions will continue to impact the world, but all of this will be felt ever more intensely in Europe.

Europe is definitely entering recession. The USA risks recession, that could see prolonged low growth become entrenched as the Federal Reserve having failed to act a full year ago, now belatedly and mistakenly aggressively chases completely runaway inflation. Then we have China, which may just dip into recession in the current environment, but probably has the rosier outlook on the other side of this lockdown slow-down.

Overall for the Northern Hemisphere at least, we are looking at recession in Europe, and risk of recession in both the USA and China. With the addition of intensifying, not reducing, supply chain disruption. Global growth and trade will suffer as a result.

While Australia has enjoyed a high commodity prices flip in recent weeks, the underlying cause of this higher commodity prices is of a nature that will eat away global demand over the rest of this year and into next. The Australian market euphoria may be a done deal? In that, the Australian dollar too, with the now world famous laggard Reserve Bank falling further behind in the global hiking cycle, far behind even the Reserve Bank of New Zealand, will see the cost of holding long Australian positions become prohibitive. Especially, as most mining companies have already hedged forward the bulk of their US dollar receipts. Leaving the Aussie quite exposed.

The Australian stock market similarly has probably seen its best for the rest of the year.

The favoured bullish markets remain Gold, Oil, Gas and other commodities.

Even as the US dollar continues to appreciate. And the impressive gains already seen there, may be just the beginning.

Clifford Bennett
ACY Securities Chief Economist.

The view expressed within this document are solely that of Clifford Bennett’s and do not represent the views of ACY Securities.

All commentary is on the record and may be quoted without further permission required from ACY Securities or Clifford Bennett.

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.