George Soros predicts L-shaped US recession
Posted on 12 May 2009 with no comments from readers
Legendary hedge fund manager George Soros thinks the US economy will recover about half of the output it has lost in the current recession, and then stagnate in an L-shaped recession.
His remarks came in an interview with Frankfurter Allgemeine Zeitung. He said the downward trend in the financial crisis is easing and national economic stimulus packages are starting to work.
Bear market rally
But Mr. Soros cautioned against recent market euphoria which he has previously dismissed as a bear market rally. He said Asia would be the first region to pull out of the crisis and China was set to overtake the United States as the engine of world growth.
‘The economic freefall has been stopped, the collapse of the financial system averted. National economic stimulus programs are starting to take effect. The downward dynamic is easing,’ Soros told the German daily.
‘I expect the recovery to make up for around half of the downturn we have had and then to move into stagnation. Asia will be first to find a way out of the crisis, but America is also currently doing that.”
He noted that the US dollar was already weak, and said: ‘I don’t expect the dollar to lose much value against the euro, on the contrary’, noting that the financial crisis had shown that it was a big advantage for weak countries to be part of the euro system.
The words of George Soros are always carefully considered in the financial community. He is after all one of the world’s most successful investors and made a return of 10 per cent even last year.
Clever trading
And where his brilliance lies is in turning his market analysis into brilliant trading strategies, often way beyond the comprehension of the average investor.
What he said this week appears to negate the idea of American being the first into the recession and therefore the first out, which is the only rationale for the recent rally in stock prices. It is therefore consistent with his earlier thoughts about the recent bear market rally.
However, Mr. Soros is essentially saying keep out of markets, only the professionals can win in this environment. Fools will no doubt continue to rush in.
no Comments posted by readers:
Delighted to have found you!
Whenever Soros gives his views about investments, one must weigh it carefully; and if he talks about currency trades, this is doubly true.
Having said that, my “contrarian” sense is that he is right about the USD not falling against other currencies, though many traders are enjoying the USD’s current slide. The US is still the largest economy and the only superpower in the world. Yeah, trillions of USD are being printed, but most of that has not filtered into the hands of consumers . . . yet.
The USD Index is struggling to stay above 82.
Soros is talking up his ‘book’, as usual. He knows that this is a ’sucker’s rally’ in every market, including the USD.
…although physical gold and silver are consolidating above 900 and 12 on ’spot’, respectively. Mr Soros probably accumulates both, discreetly, imo.
What utter drivel! Ultimately, every rally is always a sucker’s rally, because in the end every rally is followed by a correction. I ignored Soros and bought financial stocks that have doubled and tripled since March. Warren Buffet has also been buying financial stocks. But Soros did not recognize what a good deal financial stocks were, because in his old age, Soros no longer thinks like a businessman. He’s hates America so much that he refuses to see a good deal when he it’s right in front of his face !!!