A person whose name escapes me at the moment once told me that Europe is always six months behind the U.S.
Major investors are starting to see the truth of this rather flippant statement. Things in sovereign debt land are a bit strange as well...default protection of U.S. bonds are twice German Bunds? (as reported by today's Wall Street Journal)
And so the bandwagon is rolling:
Gross Likes Dollar More Than Euro for 1st Time on EU
2008-07-14 03:01:05.740 (New York)
By Gavin Finch
July 14 (Bloomberg) -- For three years euro bulls used the
prospect of higher interest rates in Europe to justify the
currency's 31 percent rally against the dollar.
A growing number of the world's biggest investors say a
slowdown in the region's economy may be more severe than in the
U.S., forcing the European Central Bank to reverse this month's
rate increase. By January, the euro will be lower against the
dollar, yen and even the pound, according to the median estimate
of strategists surveyed by Bloomberg. Bill Gross, manager of the
world's biggest bond fund, turned bearish on the euro for the
first time since the currency's inception in 1999.
``We might have hit a point where the euro doesn't have a
lot to stand on,'' said Emanuele Ravano, co-head of European
strategy in London for Gross's Pacific Investment Management Co.,
which runs the $129 billion Pimco Total Return Fund. ``The euro
is ultimately very overvalued. It could be quite a bit lower at
some point in time over the next couple of years.''