CNBC Video: DOLLAR Collapses - Yen Hits $96...AND Climbing!Submitted by emalvini on Thu, 06/06/2013 - 14:31
Dollar/Yen could reach over 100 - Analyst
CNBC Video Report
June 06, 2013
We want to get more on what happens happening in the currency market, yen and dollar making big moves and interest rates quite the story today. for that we bring in paul richards head of fx distribution. he joins us on the phone. good to talk to you again. scott. the dollar index is having its worst day in a year. yen up 3% versus the dollar. what is going on? we're seeing a massive positional unwind. this is called to be long -- to be 100% wrong. the market in general has seen a nice rally in the dollar since bernanke spoke to congress and the market had been expecting tapering of qe. but suddenly the market said, what if the number tomorrow is around 150,000 and it gives reason to pause? that's caused a huge positional unwind. it's exacerbated by massive liquidity in currency marks and get this going into what we've been talking about a key event tomorrow. unwind in real illiquidity. going into the outcome tomorrow and then we'll react. but certainly surprised the market and it's caused a bit of blood on the currency street. currencies aren't supposed to move 3% in a single day there they're not. certainly not. but i think it -- what it does, it highlights how big the number tomorrow is in terms of the outcome. we could be back 3% the other way in 24 hours' time. i'm not going to know that until 8:30 tomorrow. what happens if the numbers closer to 100 and not 100, 165? there's a level markets can behave. if the market underwhelms around 130,000, the market will be fine. if we see a number coming in 90 to 100,000, unlikely as that may be, i think what we see is the market really gets concerned. obviously a massive rally in bonds, the ten-year back to 185. in general that's not going to be supportive of the dollar on yield differential. and that's what the market's getting concerned about and this is w the -- you've seen the huge positional unwind today. i agree with you, paul, as far as what that could mean tomorrow, how this is kind of shaping up to a binary bet. i agree also a bad number instead of being good is horrible. i would much rather see 160 to 200. i will take the other side of the argument, if that comes out it us kas any pause, given the economic data, i don't think that causes the fomc to pause. but that's what make a market. we both think if this comes out under 100, that's horrific. i don't think it's going to be that easy. go back to the first week in april when we got the number, you saw massive revisions going backwards and that grew those numbers to what were more acceptable numbers. so you got the revisions as you got to play around with also to see how that skews the picture as well. yeah. revisions are absolutely key. the other thing to bear in mind today, draghi was surprisingly upbeat. this guy plays on confidence. that upset the dollar as well the way the euro rallied up to 133. i think the market's going to be fine tomorrow. we'll see a number coming in around expectations at 160,000. the market is telling us today they're unwilling to take the risk, at least the currency market's unwilling and this is why we're seeing the move in an unliquid market. the ten year, the yield, threatening to go under 2% for the first time in a little while here. in the context of all of the concern about rising yields and what the impact would be on stocks. well, i maintain the view if the number creeps up near 190,000 the ten-year will break 230 and that starts 5%, 6% decline in stocks. paul, good to talk to you. thanks for coming to the phone for us. paul richards. according to blackrock the amount of new money going into etfs cracked 100 billion in may. dividend etfs, the most popular. next guest has a warping about the well-known names. todd shriver, welcome. thanks for having me. what's the warning in the context of what we're watching unfold here on wall street? well, i don't want to put it in context of a warning. just kind of reshaping investors' views of the most popular dividend etfs. investors have over the past few years embraced dividend etf like the vanguard dividend, base their composition on dividend increase street. they are very backward looking. i think going forward you want to be forward-looking in terms of what sects. is that a little bit of a different animal? statistically speaking. they want to go up to 25% net income from state-run companies. emerging markets are a very different animal. i think china is one of the plays there. india is getting better. just in etfs in general? what's your favorite dividend etf? in terms of a sector dividend play, i really like the first trust nasdaq dividend etf. a fairly new product. this one, you know, it's a play on tech dividend growth. 54% of the s&p 500.