They said it – views from 2010 about 2011 revisited

As the end of 2011 draws near, predictions for 2012 are coming thick and fast. Yet, who can claim to have clairvoyant abilities and who is just hoping last year’s analysis will be buried with their financial losses? InvestmentEurope brings you a series of brief outlooks for 2011 as they were.

Stuart Frost, manager of the Cautious Absolute Rate and Currency Fund at RWC Partners:

“In Europe, clearly Germany is at the forefront of activity, with the Benelux countries and indeed much of Northern Europe showing signs of recovery. Clearly southern Europe and Ireland continue to struggle in what has become a two tier Europe all held together by the Euro. People like to talk about market bubbles and black swan events as it relates to financial instruments.

In our opinion, almost all of these bubbles are caused by the frailty of human nature to over-hype and chase something in the false belief that it is infallible, and in this respect the Euro is no different. It is in itself a bubble within a strait jacket.

Despite the strength of Germany and others, it is an inescapable truth that if the Euro is going to hold, then to accommodate the weaker constituent parts of the Euro, we have to see some Euro weakness in 2011 down to 1.20 and lower. That in itself is not a disaster given that the Euro has traded as low as 0.9100.”

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