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FOREX presents The end of the safe haven?

FOREX.com presents The end of the safe haven? . Kathleen Brooks Research Director. Contents . De-constructing the myth of the safe haven Why did we believe in them, why we won’t in future “Safe havens” for the new paradigm . Traditional safe havens . Yen . Swiss franc . Treasuries.

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FOREX presents The end of the safe haven?

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  1. FOREX.com presents The end of the safe haven? Kathleen Brooks Research Director

  2. Contents • De-constructing the myth of the safe haven • Why did we believe in them, why we won’t in future • “Safe havens” for the new paradigm

  3. Traditional safe havens Yen Swiss franc Treasuries Gold

  4. What does it mean? • Uncorrelated to risk • Trustworthy • Stable • Piece of mind • Liquid

  5. Safe havens: why do we need them? • We like things that go up

  6. Making sense of a complex market

  7. Key characteristics – Strong domestic finances Politically stable Not controlled by capricious forces History of paying debts

  8. Something is wrong here…

  9. The unreliable safe haven

  10. Gold – Sept- Nov 2008

  11. Gold – Jan – June 2010

  12. Swiss franc – relic of safe haven era

  13. Rot at the heart of the biggest safe haven of them all…

  14. Dollar earns safe haven status

  15. Politically stable: are you serious?

  16. Stable monetary policy?

  17. Stable finances? US debt-to-GDP

  18. Who destroyed the myth of the safe haven?

  19. Central banks – major threat…

  20. What made us open our eyes? 1, Financial crisis – we became aware of debt 2, Sluggish recovery – causes central banks to act beyond traditional mandate

  21. The new reality in trading 1, central banks and governments are not safe… 2, Be careful who you trust 3, Currency wars a potential for the future 4, public finances – takes years to repair

  22. Trading in the new paradigm 1, Accept the volatility of markets 2, Look for other assets without these risks 3, factor in political and CB risk in your trading

  23. What safe havens today need to offer • Free from meddling by capricious central banks • No sovereign problems • Strong fundamentals

  24. Safe havens of the future - • Commodities: • Pros – demand expected to remain high • Cons – at risk from growth cycles, apart from agriculture …

  25. Safe havens of the future - • Commodity bloc currencies : AUD, NOK, SEK, CAD, NZD • Pros – no financial problems • Cons – limited liquidity, still affected by global growth cycle

  26. Safe havens of the future - • EM government debt • Pros – no financial problems • Cons – shallow markets, limited liquidity, politically unstable, no proven track record

  27. Safe havens of the future -

  28. Argument for agri as safe haven • Positive: • Demand is recession proof • Growing global population • Highly liquid – often traded … • Not controlled by a central bank • Negative: • Can be volatile due to the weather and growth conditions • Sensitive to supply issues (demand fairly solid).

  29. Access to agri – FOREX.com • Products: TRADE platform • Wheat • Cocoa • Cattle • Hogs • Corn • Oats • Rice • Soybean • Tip – stick to the staples, and meat…

  30. Access to agri – FOREX.com • Ease of trading with TRADE platform • Spreads are fixed for ALL markets • Comprehensive tools and analysis – Market DNA – revolutionises technical trading • Integrated news and research

  31. FOREX.com presents The end of the safe haven? Kathleen Brooks Research Director

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