By: Julie Crawshaw.Everyone is underestimating the U.S. economy, says Morgan Stanley analyst Stephen Hull, which perfectly positions the dollar for a huge comeback.
“We are constructive on the dollar because we think that the bad economic news is already reflected in the price,” Hull wrote in a note to investors. “Despite the soft patch in Q2 we expect the economy to rebound in Q3 and to grow by 3.5 percent.”
Hull points to easing financial conditions such as plunging mortgage rates and rising stock prices after the tightening that accompanied the European sovereign crisis, gradually firming domestic demand and income as evidence of his position.
In addition, Hull notes, personal savings rates have been boosted during the last two years, suggesting that consumers have rebuilt their balance sheets to some degree so they could spend more of their income in the second half. (more)
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