We’ve got an outbreak of hegemony in the world of strategy research.
Andrew Garthwaite, and his global equity research macro team at Credit Suisse, have published a currencies outlook for 2010.
With a vague promise to highlight any areas where his views differ from those of Ray Farris, head of the CS FX team, Garthwaite tells us there are actually four obvious trades in the currency markets…
1) Long NOK versus Euro
2) Long Non-Japan Asian currencies
3) Short the yen
4) Short sterling against the dollar
It was the advice on the Norwegian Kroner which caught our eye:
Norway is the only OECD country with both a current account and a budget surplus (both are huge) and it has low leverage. The NOK is 10% undervalued on PPP against the Euro – and with just 3% unemployment and house prices above previous peak, Norway is leading the rate cycle. The NOK offers a commodity hedge (energy exports are 60% of total exports) and the NOK is 15% cheaper than AUD. Buy: domestic Norway, especially DnB.
Here’s an illustration of the country’s rude health against the main sovereign rivals:
And here’s another unlikely fact: Norway is one of the largest foreign creditors among big economies, with net foreign assets at 50 per cent of GDP.
Full tome in the usual place.
Related links:
Financial eco-politics – Lex
The Norway trade – Rolfe Winkler, at Reuters