Rate cut or no, US remains in problem: Tyche Group

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Martin Hennecke , Sr Manager at Tyche Group   told CNBC-TV18 that if the Fed doesn't cuts interest rates the housing market and financial pack will go down further. If they do cut there could be bond market crisis, so either way the US is in problem.

We recommend to stay out of US but Asia will fair relatively well says Hennecke.

 

 

Excerpts from CNBC-TV18's exclusive interview with Martin Hennecke:

 

 

Q: There is nervous air across the Asian pack ahead of the big FOMC meet?

A: The last few days have been quite so there is being no major thing happening now also. We have been saying it really doesn't matter in our view what the Federal Reserve is going to do in terms of the US markets because if they don't cut interest rate then one will see the housing market and the financial pack going down much further. But if they do cut interest rate then you will see the bond market coming under tremendous pressure and last week you have seen how in Japan had a a sell-off in government bonds.

 

Generally also the Investors are getting wary with rising inflation in bond markets and so we could see is a bond market crisis in the United States if they do cut interest rate further.

 

So either way they are much in problem and so we recommend staying out of the US but we think Asia will fair relatively well and especially the Asian currencies are pretty low valued if one compares them to euro for example.

 

Q: There have been calls for China to tamper Yuan appreciation what is your reaction to that?

A: I will hold it more with Jim Rogers; he said that the Yuan to dollar could rise to 1 to 2, the exchange rate. So whether the kind the Chinese Government wants it or not, the Yuan is hugely undervalued and all the productive capacity has been moving to China. The Chinese economy is extremely healthy there and succeeding in developing their own consumer market.

 

In the long-term the Yuan would have absorbed a staggering potential to appreciate. If the US dollar really crashes fundamentally and you have the sell-off from the Japanese Central Bank and other Central Banks start withdrawing more, then we could see the Asian countries appreciate very dramatically.