What is your euro zone call?
We are looking for the euro zone to survive. But we are looking for the euro to finish the year near 1.29, down from 1.35 to the dollar now.
In the U.S., what do you expect out of the supercommittee?
There could be a broad agreement in principle. But I think the U.S. fiscal position is not going to be addressed really before the 2012 elections.
How will Asian currencies ex-Japan do next year?
Asia is regarded as the emerging market whose currencies are best positioned to weather this financial storm. That’s partly because their economies are anchored to China and partly because other emerging markets, like Eastern and Central Europe, are having a difficult time.
Do you still see a strong yen?
I think the yen is going to get stronger. The problem is not that traders are betting against the Bank of Japan. And it is not the trade surplus pushing up the yen—Japan has a trade deficit. It’s that the Japanese have become coupon clippers. They are drawing their income from investments overseas, and that is worth more than the BOJ’s effort to weaken the yen. Foreigners are still buying Japanese bills, and the Japanese themselves have turned into sellers of the equities and bonds they had overseas.