The Impact of Syria, Fed Tapering on Currencies

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Sept. 5 (Bloomberg) –- Merk Investments President & CIO Axel Merk discusses the outlook for the currency market with Mark Crumpton on Bloomberg Television’s “Bottom Line.” (Source: Bloomberg)

More now on the conflict in syria.

What does all of this mean for the u.s. dollar and four treasuries.

Let's bring in axel merk , at merck investments, he oversees currencies.

He helps people to invest away from the dollar.

Always a pleasure to have you on the broadcast.

Investors are seeking a safe haven amidst concern about a possible military strike in.. it did gain today.

It gained today, but whenever there was a crisis flaring up, was the money really going to the u.s. dollar?

Look at treasuries, the ultimate safe haven, it has an plunging.

Inside -- in recent times, the euro has been the beneficiary.

Ultimately, history is our judge when the status of the safe haven is completely a road it.

Does it mean these safe havens are no longer really safe?

You mentioned the 10 year treasury, the yield today jumping nine basis points.

It is a two-year high . is this about possible military action in syria or more about's will tapering by the federal reserve?

It is about a much bigger threat out there.

The bigger threat is that we might get economic growth.

The reason why i say it is a threat is because good luck to the federal reserve trying to detain that are there are talks about how the federal reserve has done forward guidance, while the fine tuning does not work so well.

People are estimating the huge impact that will have on housing market.

Mortgage rates are coming up.

The problem with tapering and all of that is we just do not know what the fed will be up to.

There is a lot of uncertainty.

Plenty of risk.

Richard fisher said the fed wants to ensure the financial markets are not disrupted.

The quote is, this does not go on forever.

How does the fed and its stimulus in a way -- you do not do it by running around like a headless chicken.

That is what the federal reserve is doing right now with no leadership.

It needs new blood.

He would love to wrap up his legacy by saying, i initiated the tapering of it, but it depends on what the successor thanks.

What is their path?

How will we say things going forward?

It will cause a lot of ripple effect in the markets.

Emerging markets will suffer the most and i do not think the dollar will benefit from that.

Let's talk about gold for a second.

It felt today.

Does that reinforce the case for the fed to slow down its case?

Gold has had a volatile ride.

It reinforces the notion there is no safe haven whatsoever.

It is not in the u.s. dollar or gold either.

We are living in an increasingly volatile state in the world.

The one place that has not been so volatile is the stock market.

To us, that is a warning flag that means there might be a bubble in the market.

We think you should be diversifying on the less risky side.

On the currency side, where you can spread your risk on diversified returns and not take on interest rates.

Mario draghi reaffirmed his commitment to keeping interest rates low.

He said they will remain accommodated as long as necessary.

Lending rate for banks unchanged at 5/10 of one percent.

Is the yorkie -- european economy starting to recover?

German elections, and guess what, stimulus programs of -- appear to be working.

Druggie is tying to -- trying to talk down the euros.

It is not working well.

This text has been automatically generated. It may not be 100% accurate.


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