Russell is predicting the end of the dollar’s run, instead favoring the yen and eyeing a potential selloff in developing market currencies.
Looking globally, Russell believes that China is in for a soft landing, and Asia-Pacific equities in general are expected to generate low absolute returns and high volatility over the next year.
Russell says that Europe and Japan present the best value opportunities in equities while sounding a note of caution on emerging markets. Equities in both regions are benefiting from quantitative easing, but Russell says that the impact of QE should continue to diminish, strengthening the yen and the euro against the dollar. The firm is currently overweight in bonds and equities in Europe.
Schwab’s Aguilar agreed that Japan produces the best opportunity for value moving into the second quarter, but Wander warns that monetary policy in Europe and Japan is a sign of market weakness.
“Our central bank policies are divergent because the economies are moving in different directions,” Wander says. “The fundamentals in Europe and Japan are unstable and deteriorating.”