US not best for investment - poll

| Friday September 24, 2010 00:00

The US ranked first three months ago in the last quarterly Bloomberg Global Poll. Along with the slipping perceptions of US markets in the most recent survey, conducted last week, poll respondents say the Federal Reserve is likely to take further steps to try to bolster the economy.

In the poll of 1408 investors, analysts and traders, respondents rate the US fourth for potential returns over the next year, behind Brazil and China, tied for first, and India, in third place. The US economic situation 'is obviously unsustainable, and the concerted attempt to suspend disbelief is playing increasingly poorly abroad', says Eric Kraus, chief strategist at Otkritie Brokerage in Moscow. 'One can delay, but no one can forestall the unwind of a multidecade credit bubble.' Economic reports released since the June poll show US gross domestic product growth slowed to 1,6 percent in the second quarter from 3,7 percent in the first . In the final quarter of last year, GDP grew 5  percent . Expectations for GDP growth next year have dropped to a median forecast of 2,5 percent this month from 2,9 percent in June, according to Bloomberg's survey of economists.

Since the June survey, US stock markets have been on the rise. The Standard & Poor's 500 index has risen 3,62 percent since the last investor poll on June 3. That is not as much as Brazil's Bovespa index, which is up 10,56% and India's Bombay Stock Exchange Sensitive index, up 10,44%. The US stocks still did better than China's Shanghai Stock Exchange composite index, which has risen 1,41 percent since June 3. 'I think the US will get back on track, but not in the next six to 12 months,' says poll respondent Thomas Knudsen, senior trader at OW Supply & Trading in Copenhagen. Two-thirds of investors were expecting US Federal Reserve policy makers, who met late yesterday, to ease monetary policy through bond purchases by the end of the year. A similar 65 percent majority says the Fed bond purchases will not boost US economic growth.Overall, investors give the central bank favourable marks, with a 57 percent majority believing its monetary policy is 'about right'. More say it has been too aggressive, the view of 26 percent, than say it has been too timid, a view held by 14 percent. Fed chairman Ben Bernanke is viewed favourably by 71 percent of respondents, up from 67% in June. He ranks highest in a list of eight global leaders and policy makers that includes President Barack Obama, Chancellor Angela Merkel of Germany and European Central Bank president Jean-Claude Trichet.

Only one out of six investors believes the US economy is improving, although 45 percent consider the US 'stable'. Another 37 percent believe the US is deteriorating.

The poll also shows confidence in the dollar has slipped since June, when 63 percent of investors believed the US currency would rise against the euro during the following three months. Forecasts are now evenly divided: 34 percent now expect a stronger dollar in three months, 32% expect little change and 30 percent are expecting a weaker dollar.Investors are confident the US will avoid some of the worst outcomes. Seven out of 10 investors say they believe there is little or no risk of a US double-dip recession. Six out of 10 see little or no risk the US will endure a Japan-like 'lost decade' of minimal or no growth. (Bloomberg)