Europe Unseats U.S. as Best Place to Invest in Bloomberg Poll

Europe gets the nod as the best place to invest for the first time since at least 2009 in a Bloomberg survey of financial professionals, unseating the U.S.
Thirty-five percent of those surveyed in the Bloomberg Markets Global Poll said the euro zone would be among the one or two markets offering investors the best opportunities over the next 12 months.
It was the first time that Europe came out on top since the survey of traders, analysts, money managers and executives who are Bloomberg customers began asking that question in October 2009. The U.S., with a 33 percent share, fell to second, the first time it’s not been No. 1 since November 2010. China, which was respondents’ top choice back then, now is viewed as one of the worst markets to invest in.
Europe fared well in the poll in spite of the continued standoff between Greece and its creditors over payment of its debts and the risk that it may leave the euro zone.
“It’s like Connecticut withdrawing from the U.S.,” said Charles Brown, president of CB3 Financial Group in Geneva, Illinois, who took part in the poll. “Would we miss them? Yeah. Is it going to change the economy of the country? No.”
Other highlights of the April 14-15 survey: A majority of those contacted said the U.S. Treasury debt market is already a bubble or on the verge of being one, while more than three-quarters said the same of Internet and social networking stocks. Respondents were upbeat on the dollar: It was chosen as the asset of choice to go long now.
They were downbeat on oil, with only 12 percent expecting crude prices to rise above $75 per barrel this year and 41 percent not anticipating that price will be exceeded until after 2016. Russia, Brazil and China were seen as markets to avoid over the next 12 months, with investors saying the Chinese economy is in the worst shape in two and a half years.
About two in five polled described the euro region’s economy as improving, up from 14 percent in January. European investors were more optimistic than those in the U.S. and Asia, with almost half saying the area’s economy is getting better.
“Europe’s economy is improving, off an admittedly low base,” John Carlson, a poll participant and president of Epic Investment Management in Boulder, Colorado, said in an e-mail. “Also, Europe’s stock market has been strong, and that market probably has more predictive power than people recognize.”

Asian Stocks Outside Japan Drop From Seven-Year High Before Fed

Asian shares outside Japan declined from a seven-year high as investors weighed company profits and awaited the outcome of a two-day Federal Reserve policy meeting.
Wynn Macau Ltd. slumped 7.6 percent in Hong Kong after the casino operator’s earnings missed analyst estimates as China’s anti-corruption campaign curbed gaming revenue. Anhui Conch Cement Co. slid 3.6 percent after the mainland’s largest cement maker’s first-quarter net income slumped 31 percent. Hyundai Heavy Industries Co. dropped 5.2 percent in Seoul after the shipbuilder reported a bigger-than-expected loss.
The MSCI Asia Pacific excluding Japan Index sank 1 percent to 519.64 as of 4:05 p.m. in Hong Kong after closing Tuesday at the highest since January 2008. The measure is heading for a 7 percent advance in April, the most since January 2012. About 200 companies on the gauge report results this week, according to data compiled by Bloomberg.
“Poorer earnings provide some investors an excuse to take profit given the strong run up that we’ve seen in the market in the last few weeks,” Jason Low, equity strategist at DBS Wealth Management & Private Bank in Singapore, said by phone. “Investors are still quite bullish and are probably waiting to buy on dips. Fed policy moves have been partially priced in. Yellen will probably only raise rates when she thinks the U.S. economy can withstand that eventual rate hike.”

Airbus A380 Haunted by Feeble Orders Marks Decade in Skies

At the tender age of 10, the Airbus A380 is already entering a mid-life crisis.
The double-decker aircraft has failed to win a single order from any new airline customer for two years now, and senior management was forced to come to the airliner’s defense in December after the planemaker’s parent introduced the possibility of axing the A380 outright. As the mid point of the year approaches, the plane has yet again drawn a blank on deals.
It’s a far cry from the jubilations in 2005, when the giant airliner took off for the first time, hailed as the star of 21st century aviation. Airbus said the A380, certified to carry as many as 853 passengers, would push arch-rival Boeing Co. out of the monopoly on jumbo jets it held for decades and herald a new dawn of travel, pairing ultra-luxury with mass transport while alleviating the strain on congested airports.
“It’s true the market hasn’t developed as much as we’d have liked,” Airbus Chief Executive Officer Fabrice Bregier said this month. “This plane was probably launched 10 years too early.”
Bregier is now trying to breathe fresh life into the A380 campaign. Airbus has assembled a team of employees from within sales, marketing, engineering and design to lobby existing and future customers of the aircraft -- including those who may buy the plane second-hand.

China Is Set to Lose Manufacturing Crown

The cheap, young labor and strategic location of Myanmar, Cambodia and Laos are set to draw increasing numbers of manufacturers to Southeast Asia, which will eventually displace China for the title of "world's factory.''
The transformation will be part of the rise of the Association of Southeast Asian Nations to become the "third pillar'' of regional growth after China and India, ANZ Bank economists led by Glenn Maguire reckon. By 2030, more than half of 650 million people in Southeast Asia will be under the age of 30, part of an emerging middle class with high rates of consumption.

"We also believe Southeast Asia will take up China’s mantle of the ‘world’s factory’ over the next 10-15 years as companies move to take advantage of cheap and abundant labor in areas such as the Mekong,'' ANZ said. What will likely assist this shift is the connection between low-cost labor in places like Myanmar, Cambodia and Laos, cost-effective manufacturers in Thailand, Vietnam, Indonesia and the Philippines, and sophisticated producers in Singapore and Malaysia. Southeast Asian nations have resolved to establish the Asean Economic Community by the end of 2015 to enable the free movement of goods, services, capital and labor between the 10 member states.
Together, the Southeast Asian nations could lift intra-regional trade to $1 trillion by 2025, ANZ estimates. Foreign direct investment into Asean from the major economies could climb to $106 billion in 2025, having already eclipsed investment into China for the first time in 2013.
"Most of Asean's member countries lie at the junction of the Pacific and Indian Oceans," ANZ noted. "The land-based members of Asean sit between the two most populous countries in the world – China and India. Access to these land and maritime routes allows Asean to participate in Asia’s expanding production network.''

Gundlach Weighs 100-Times Levered Bet Against German Bonds

DoubleLine Capital’s Jeffrey Gundlach said he’s considering making an amplified bet against German bonds to join a growing group of top money managers wagering against the debt after some yields turned negative.
“Let’s say you leverage up the German two-year 100 times, that’s a 20 percent return,” Gundlach said in a Bloomberg Television interview with Erik Schatzker on Tuesday at the Milken Institute Global Conference in Beverly Hills, California, referring to the potential short.
Since September last year, the pool of European bonds that essentially charge investors to own them has almost tripled to 2.8 trillion euros ($3.1 trillion) from 1 trillion euros, according to Bank of America Corp. data. The increase has been driven by central banks buying bonds to stimulate economies and has sent yields on German two-year notes to minus 0.273 percent, according to data compiled by Bloomberg.
Last week, Bill Gross, who ran the world’s largest bond fund until last year, called the 10-year German bund the “short of a lifetime.” Billionaire hedge fund manager Alan Howard said yesterday at the Milken conference that it’s “just crazy” to hold bonds with negative yields.
Gundlach said his Los Angeles-based firm is considering the German bond short for some of its riskier strategies. The investment would require borrowing money and putting capital aside for margin calls, he said.

US Dollar down ahead Fed policy Decision

The dollar softened in Asia Wednesday on expectations that the US Federal Reserve will delay an interest rate hike following fresh data pointing to slowing growth in the world's biggest economy, analysts said. The greenback fell to 118.83 yen in mid-morning trade from 118.88 yen in New York and sharply lower than the 119.10 yen earlier Tuesday in Asia. And while the euro edged down to $1.0969 and $130.33 from $1.0981 and 130.55 yen in US trade, it is well up from $1.0880 and 129.54 yen earlier Tuesday. The Fed's policy-setting committee ends a two-day meeting later Wednesday and traders are betting on a rate hike being put back, while also looking for some guidance about its intentions later in the year. The central bank had previously signalled a possible hike in June, but analysts now expect it in September at the earliest following a spate of soft readings. The latest came Tuesday as the Conference Board reported its index of consumer confidence tumbled in March, instead of rising as expected. Consumers reported growing pessimism about current and short-term US economic conditions. 'Expectations for tonight's ... decision have now changed significantly, with traders now expecting interest rate lift-off to be pushed out from June to September at least, sending the US dollar into reverse,' said Nicholas Teo, market analyst at CMC Markets in Singapore. 'The oil crash, slower overseas economies and a higher (dollar) have made it increasingly difficult for the US to defy gravity,' he added. Also in focus is the government's first estimate of US first-quarter economic growth, with analysts predicting a 1.0 percent rate, down from 2.2 percent in the previous three months. Source : AFP The dollar softened in Asia Wednesday on expectations that the US Federal Reserve will delay an interest rate hike following fresh data pointing to slowing growth in the world's biggest economy, analysts said. The greenback fell to 118.83 yen in mid-morning trade from 118.88 yen in New York and sharply lower than the 119.10 yen earlier Tuesday in Asia. And while the euro edged down to $1.0969 and $130.33 from $1.0981 and 130.55 yen in US trade, it is well up from $1.0880 and 129.54 yen earlier Tuesday. The Fed's policy-setting committee ends a two-day meeting later Wednesday and traders are betting on a rate hike being put back, while also looking for some guidance about its intentions later in the year. The central bank had previously signalled a possible hike in June, but analysts now expect it in September at the earliest following a spate of soft readings. The latest came Tuesday as the Conference Board reported its index of consumer confidence tumbled in March, instead of rising as expected. Consumers reported growing pessimism about current and short-term US economic conditions. 'Expectations for tonight's ... decision have now changed significantly, with traders now expecting interest rate lift-off to be pushed out from June to September at least, sending the US dollar into reverse,' said Nicholas Teo, market analyst at CMC Markets in Singapore. 'The oil crash, slower overseas economies and a higher (dollar) have made it increasingly difficult for the US to defy gravity,' he added. Also in focus is the government's first estimate of US first-quarter economic growth, with analysts predicting a 1.0 percent rate, down from 2.2 percent in the previous three months. Source : AFP