Docstoc

MORGAN S TANLEY- Current USD Rally

Document Sample
MORGAN S TANLEY- Current USD Rally Powered By Docstoc
					                                                            MORGAN STANLEY RESEARCH

                                                            Morgan Stanley & Co.   Hans Redeker
                                                            International plc
                                                                                   Hans.Redeker@morganstanley.com
                                                                                   +44 20 7425-2430




         March 15, 2012

         Currencies
Global
         The Cyclical Aspect of
         the Current USD Rally
          The USD has reacted positively to the release
           of strong US data and the Fed tightening its
           language ….

          …leaving the impression the USD is returning
           to the pro-cyclical behavior witnessed in the
           early 80s and from 1995 to 2001.                   This is an excerpt from the FX Pulse
                                                              Changing USD Parameters?, March 15, 2012.
          While US growth indicators have improved …

          …EM growth signals have come in weak
           across the board …

          …leading towards a shift in the contribution
           to global growth in the direction of the US.

          However, global activity is still weak and …

          …with global money supply growth easing,
           the USD is receiving support from anti-
           cyclical factors.

          USD strength is in line with the fading global
           growth outlook.

          US residents have started looking abroad less
           when seeking investment opportunities.




                                                            For important disclosures, refer to the
                                                            Disclosures Section, located at the end of
                                                            this report.
                                                                      MORGAN STANLEY RESEARCH

                                                                      March 15, 2012
                                                                      The Cyclical Aspect of the Current USD Rally




The Cyclical Aspect of the Current USD Rally
Hans Redeker                                                          such as global money supply growth pointing south, the USD
                                                                      should remain well supported over the next few quarters.
                                                                      Exhibit 1
    The USD has reacted positively to the release of strong US
                                                                      Correlation Between the US Economic Surprise
     data and the Fed tightening its language ….
                                                                      Indicator and the DXY
    …leaving the impression the USD is returning to the pro-
                                                                         1.5
     cyclical behavior witnessed in the early 80s and from 1995 to                  US Surprise and DXY %MoM (2 month correlation, 1 day lag)
     2001.                                                                 1

    While US growth indicators have improved …                          0.5

    …EM growth signals have come in weak across the board …               0

    …leading towards a shift in the contribution to global growth      -0.5
     in the direction of the US.
                                                                          -1
    However, global activity is still weak and …
                                                                        -1.5
    …with global money supply growth easing, the USD is                   Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12

     receiving support from anti-cyclical factors.                    Source: Bloomberg, Morgan Stanley Research


    USD strength is in line with the fading global growth outlook.
                                                                      The USD Versus the US Economic Cycle
    US residents have started looking abroad less when seeking
                                                                      The USD has traded anti-cyclically over the past decade, with
     investment opportunities.
                                                                      only 2005 the notable exception. Anti-cyclical trading behavior
                                                                      occurs when a currency comes under selling pressure as
                                                                      economic conditions improve and vice-versa. The USD, the
Strong US Employment – Strong USD?
                                                                      CHF, and the JPY are best known within the DM currency
US data, including labour market reports, have come in on the         world for anti-cyclical behavior. Low USD capital costs due to
strong side of expectations causing the Fed to tighten the            the innovative and efficient US banking sector,
language of its monetary policy statement. The USD shot up            accommodative central bank conditions, and relatively low
across the board supported by rising interest and yield               yields compared to expected returns abroad have made the
differentials, leaving the impression that the USD is changing        USD the world’s best liked funding currency.
its trading behavior.
                                                                      Accordingly, improving US economic conditions signaled to
Previous trading experience would have suggested USD                  the global investor community that returns were beginning to
weakening in response to a strong US employment report;               rise. This often precipitated a net flow of funds into higher
instead the USD rallied across the board. Investors are now           yielding high-beta markets. Under these circumstances,
wondering if the USD is changing to follow a pro-cyclical             investors would borrow in USD and leverage these positions
trading behavior. Exhibit 1 illustrates the correlation between       to get high returns abroad. This caused a negative USD
the Morgan Stanley US Economic Surprise Indicator and the             impact when US data came in above expectations.
USD. While the correlation has reversed from negative to
                                                                      The anti-cyclical position of the CHF and JPY is explained by
positive recently, fluctuations in the relationship are still
                                                                      Switzerland and Japan’s net foreign asset positions. When
substantial. Today’s ‘FX Pulse’ tries to shed some light on the
                                                                      global economic conditions improve and global interest rates
debate concerning the cyclical position of the USD.
                                                                      rise, local fund managers in Switzerland and Japan will
We differentiate between the USD reacting to domestic US              reduce currency hedges on their asset positions held abroad.
data strength and weakness outside the US, especially in the          This causes the CHF and the JPY to weaken against other
EM world. The USD is used globally, with 54 countries having          currencies when global rates rise in response to better
pegged their own currencies in one form or another to the US          economic data. However, in today’s analysis we will focus on
unit. Hence, global economic performance should maintain its          the USD.
anti-cyclical impact on the USD and with leading indicators

                                                                                                                                                   2
                                                                   MORGAN STANLEY RESEARCH

                                                                   March 15, 2012
                                                                   The Cyclical Aspect of the Current USD Rally




A Look Back into the History of Investment Themes                  Nowadays, Asia’s investment to GDP ratio is high again, but
                                                                   unlike in the 90s, Asian countries run current account
Funding in USDs and exporting these funds overseas
                                                                   surpluses and external net asset positions. Accordingly, a
involves analyzing the risk reward of potential investments
                                                                   local funding crisis as experienced in the 90s is not likely.
abroad and comparing this with alternative investments,
                                                                   However, high investment to GDP ratios often leads to returns
including domestic opportunities in the US.
                                                                   on investments falling over time – even if over-investment has
There were times when the US developed investment                  been domestically financed. Exhibit 3 illustrates Japan’s
opportunities that caused international flows into the US,         experience with a domestically financed investment boom.
leading to prolonged periods of the USD trading pro-cyclically,    The country overinvested in the 80s and saw its bond yields
i.e. becoming positively correlated with US economic data,         falling in the 90s, in line with the normalization of the
such as US labour market data. The chart plots household           investment / GDP ratio. Japan became a low-return country
employment against the performance of the USD. Obviously,          and saw the inflow of foreign capital virtually come to a
at first glance there is no correlation visible. Nonetheless, in   standstill. Exhibit 4 shows the ratio of investment versus GDP
the early 80s and the mid 90s the USD broke higher when US         in China, which reached a record high last year.
employment conditions improved. Both periods saw the USD
                                                                   Exhibit 3
break out of a long-term downtrend. Both periods saw regions
                                                                   Japan: Investment GDP Ratio Versus JGB Yield
that had previously enjoyed large capital inflows run into
difficulties due to overinvestment. In the early 80s this region
was Latin America and in the mid 90s it was Asia.

Exhibit 2
US Household Employment versus USD




                                                                   Source: Reuters Ecowin, Morgan Stanley Research

                                                                   Exhibit 4
                                                                   China: Investment / GDP Ratio on the Rise


Source: Reuters Ecowin, Morgan Stanley Research

Latin America overinvested in the 70s. This overinvestment
was funded by US banks reallocating deposits of oil exporters
held with US based banks into Latin America. The 70s were a
period of very easy monetary conditions and negative real
yields in DM, not dissimilar to the current environment.

The Asian investment boom in the early 90s came on the
back of the saving and loan crisis and easy monetary policy
from the Fed between 1987 and 1993. As the Fed tightened in
1994, pushing bond yields up, the risk adjusted return of          Source: Reuters Ecowin, Morgan Stanley Research
Asian investments fell below that offered in the US. The flow
of funds into Asia dried up, leaving Asian current account         Misallocation of capital will always lead to lower growth,
deficits exposed. Asian short-term rates went up, closing the      regardless of whether this misallocation is domestically or
external funding gap.                                              externally funded. An externally funded misallocation lends a
                                                                   volatile element to the adjustment process, while a


                                                                                                                               3
                                                                                   MORGAN STANLEY RESEARCH

                                                                                   March 15, 2012
                                                                                   The Cyclical Aspect of the Current USD Rally




domestically funded misallocation leads to a gradual                               What Is New?
adjustment. The results – namely low nominal and real
                                                                                   The portfolio investment flows from the US into overseas
returns – are similar in the end.
                                                                                   security markets have reversed significantly. Exhibit 5
For instance, Japan experienced an internal misallocation of                       compares the deposit inflows into unit investment trusts and
capital in the 80s. The economy then produced low returns for                      net securities investment flows. Until recently, both data
more than two decades as it brought its investment to GDP                          series had been tightly correlated, but now unit trusts report a
ratio down to a sustainable level. It is true that the JPY went                    substantial increase of deposit inflows at the same time that
up, but the strength of the JPY was due to falling domestic                        US based investors have moved funds back home. This is a
demand, resulting in even bigger Japanese external                                 new development.
surpluses. The recycling of these surpluses pushed net
                                                                                   The unit trust market has an outstanding volume of
foreign asset positions up, but international capital flows into
                                                                                   USD54bln, which is relatively small when compared to the
Japan died down.
                                                                                   entire US capital-market. However, the indicative function of
                                                                                   this market should not be underestimated. Unit trusts invest
New Themes – Old Correlations?
                                                                                   into themes and are linked to specific projects. Often, these
When big investment themes die, new ones tend to be born.                          funds receive inflows at times when liquidity is ample, while
The collapse of the Latam boom in the late 70s occurred at                         deposit inflows decrease when liquidity conditions weaken.
the same time as investors discovered US financial market
                                                                                   Exhibit 5
de-regulations and began pushing funds into the US share
                                                                                   US Unit Investment Trusts: Developing Domestic
and private equity market. And when the early 1990s Asia
                                                                                   US Focused Investment Themes?
boom was followed by bust, it was the US high tech sector
that emerged as the new theme, offering high returns that led
to capital inflows into the US and a higher USD.

EM investment themes were followed by DM investment
themes. Of course, it might be premature to forecast the end
of the Asian/EM boom, but high investment / GDP ratios might
impact risk reward considerations. At a given return, the risk
of investing into EM might now be higher compared to the
past when investment to GDP ratios were lower, indicating
lower misallocation of capital risk at that time.

Reassessing the risk-reward for EM investments relative to
DM investments is nothing new for global portfolio managers.                       Source: Reuters Ecowin, Morgan Stanley Research
Indeed, when global activity retreats, the move back into the
USD is often the result of this reassessment. However, are we                      Over the past year, unit trusts have seen USD3bn in inflows,
entering a new paradigm where the risk-reward assessment                           nearly matching the inflows reached in 2007 and in 2010.
turns in favor of the USD even during an economic                                  However, in 2007 and 2010 US residents increased their
expansion? Over the course of the past 40 years it happened                        holdings of foreign currency denominated securities
twice, so it might be hasty to rule out this outcome                               contributing to USD weakness. Nowadays, US residents have
completely. 1 Indeed, there are some signs that US investment                      reduced their activities in foreign currency securities, but
themes are building up.                                                            increased exposure in unit trust funds. The logical explanation
                                                                                   for these diverging flows is that US unit trusts are developing
                                                                                   domestically oriented investment themes. Certainly, the unit
                                                                                   investment trust market is small and the divergence of flows is
                                                                                   in its early stages. However, we will keep a close eye on
1
    The Cloud computing technology may become the new growth market. Cloud         these statistics. Outperforming US capital markets combined
    computing services require combining the excellence of computing
    technology with a strong legal system in the country hosting the cloud         with USD strength would argue the USD is converting from an
    technology. Anglo-Saxon Countries offer the advantages of a strong legal and   anti-cyclical currency towards a pro-cyclical currency.
    technology environment. Markets tend following ‘themes’, when allocating
    capital. We wonder what will be the next big investment theme when the EM
    markets theme has run its course.


                                                                                                                                                   4
                                                                 MORGAN STANLEY RESEARCH

                                                                 March 15, 2012
                                                                 The Cyclical Aspect of the Current USD Rally




Over the past decade, the USD was the dominant funding           supply growth now runs at 13% compared to an average of
currency. Should the US lose its funding currency status then    18% witnessed over the past decade. Latam has seen a
the USD will convert from a funding towards an asset             similar pattern of declining money supply growth rates.
currency. Our FX Year Ahead Outlook: The Year of the USD,        Overall, global money supply growth has entered a
November 30, 2011, predicted the EUR becoming the funding        weakening trend.
currency of choice as the ECB may have to employ monetary
                                                                 Exhibit 7 shows the correlation between global money supply
accommodation for longer than any other major central bank.
                                                                 growth (M-2) and the USD. The message is straightforward.
We predicted the EUR – Asset correlation to weaken and
                                                                 When money supply growth shrinks it is time to buy the USD
since we made this prediction we have seen the EUR
                                                                 and when global money supply expands it is time to sell the
weakening its asset linkage. However, the mirror image of this
                                                                 USD. Since money supply is a reliable indicator of economic
development on EUR markets is the USD increasing its asset
                                                                 activity the reverse correlation between global money supply
relationship. The EUR is the anti-USD and vice versa. The
                                                                 growth and the USD supports the still anti-cyclical behavior of
declining correlation between asset markets and the EUR
                                                                 the US unit.
sees the USD’s negative correlation with assets slowly turning
around.                                                          Exhibit 7
                                                                 The USD versus Global Money Supply Growth
Exhibit 6
The USD No Longer Holds Its Reverse Relationship
with the Performance of Equities




                                                                 Source: Reuters Ecowin, Morgan Stanley Research

                                                                 At the same time as Asian and other EM growth indicators
                                                                 weakened, the US TIC report showed US net purchases of
Source: Reuters Ecowin, Morgan Stanley Research
                                                                 foreign securities generating a substantial flow back into the
                                                                 US. We have plotted the net fund flow into EM against net
Non-US Growth Weakness Supports USD                              purchase of foreign securities by US residents, showing the
While the USD’s reaction to US domestic data releases and        high correlation between the two data series.
asset market performances has started to change, the USD         Exhibit 8
has maintained its reverse relationship with global economic     US Net Security and EMK Flow Data Correlate
indicators.                                                      Warning That Global Investment Tide Has Turned
Recent economic releases from Asia have been weak.                   60             US Residents' Portfolio Outflows (Left Axis)        12
Exports have eased across the board causing trade surpluses                         EM Retail Inflows (Right Axis)

to reverse into deficits in some cases. Japan, a country             40                                                                 8

running extremely high trade and current account surpluses
                                                                     20                                                                 4
has reported its biggest monthly trade deficit since records
started in 1985. China reported a February trade deficit of            0                                                                0
USD31.48bn due to underperforming exports and its FDI’s
                                                                    -20                                                                 -4
have fallen for four months in a row. In Taiwan, business
confidence has failed to rebound from low levels. While the         -40                                                                 -8
list of negative data points is long, credit and money supply              04    05      06      07      08         09   10   11   12
growth has continued to decline in the region. China’s money     Source: Haver Analytics, Morgan Stanley Research



                                                                                                                                             5
                                                                   MORGAN STANLEY RESEARCH

                                                                   March 15, 2012
                                                                   The Cyclical Aspect of the Current USD Rally




Exhibit 9                                                          However, the positive USD reaction to stronger US data
US Residents Reduce Net Flow Abroad, Which Is a                    would have been less emphasized if EM growth indicators
USD Positive                                                       were not coming in as weak as they currently are. Weak
                                                                   money and credit supply data do not bode well for the growth
                                                                   outlook outside the US. US residents have started shifting
                                                                   funds back home, investing locally instead of seeking higher
                                                                   returns abroad. Under these circumstances we expect the
                                                                   USD to stay strong while high beta currencies should come
                                                                   off. The euro’s slow conversion towards a funding currency
                                                                   should add to USD support. To put the USD back under
                                                                   selling pressure, EM economic indicators need to rebound.
                                                                   Hence, bullish USD traders should study EM economic data
                                                                   releases, which will help controlling the positioning risk.


Source: Reuters Ecowin


Conclusion
The USD has entered the best of all worlds. While domestic
US growth indicators have picked up causing the Fed to
tighten the language of its recent interest rate statement, non-
US growth indicators have weakened. Domestically, the USD
has breached relationships leaving the impression of pro-
cyclical behaviour returning.




                                                                                                                              6
                                                                                            MORGAN STANLEY RESEARCH

                                                                                            March 15, 2012
                                                                                            The Cyclical Aspect of the Current USD Rally




                                                               Disclosure Section
The information and opinions in Morgan Stanley Research were prepared or are disseminated by Morgan Stanley & Co. LLC and/or Morgan Stanley
C.T.V.M. S.A. and/or Morgan Stanley Mexico, Casa de Bolsa, S.A. de C.V. and/or Morgan Stanley & Co. International plc and/or RMB Morgan
Stanley (Proprietary) Limited and/or Morgan Stanley MUFG Securities Co., Ltd. and/or Morgan Stanley Capital Group Japan Co., Ltd. and/or
Morgan Stanley Asia Limited and/or Morgan Stanley Asia (Singapore) Pte. (Registration number 199206298Z) and/or Morgan Stanley Asia
(Singapore) Securities Pte Ltd (Registration number 200008434H), regulated by the Monetary Authority of Singapore (which accepts legal
responsibility for its contents and should be contacted with respect to any matters arising from, or in connection with, Morgan Stanley Research)
and/or Morgan Stanley Taiwan Limited and/or Morgan Stanley & Co International plc, Seoul Branch, and/or Morgan Stanley Australia Limited
(A.B.N. 67 003 734 576, holder of Australian financial services license No. 233742, which accepts responsibility for its contents), and/or Morgan
Stanley Smith Barney Australia Pty Ltd (A.B.N. 19 009 145 555, holder of Australian financial services license No. 240813, which accepts
responsibility for its contents), and/or Morgan Stanley India Company Private Limited and their affiliates (collectively, "Morgan Stanley").
For important disclosures, stock price charts and equity rating histories regarding companies that are the subject of this report, please see the
Morgan Stanley Research Disclosure Website at www.morganstanley.com/researchdisclosures, or contact your investment representative or
Morgan Stanley Research at 1585 Broadway, (Attention: Research Management), New York, NY, 10036 USA.
For valuation methodology and risks associated with any price targets referenced in this research report, please email
morganstanley.research@morganstanley.com with a request for valuation methodology and risks on a particular stock or contact your investment
representative or Morgan Stanley Research at 1585 Broadway, (Attention: Research Management), New York, NY 10036 USA.
Global Research Conflict Management Policy
Morgan Stanley Research has been published in accordance with our conflict management policy, which is available at
www.morganstanley.com/institutional/research/conflictpolicies.
Important Disclosure for Morgan Stanley Smith Barney LLC Customers
The subject matter in this Morgan Stanley report may also be covered in a similar report from Citigroup Global Markets Inc. Ask your Financial Advisor or use Research
Center to view any reports in addition to this report.

Important Disclosures
Morgan Stanley is not acting as a municipal advisor and the opinions or views contained herein are not intended to be, and do not constitute, advice within the meaning
of Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Morgan Stanley Research does not provide individually tailored investment advice. Morgan Stanley Research has been prepared without regard to the circumstances
and objectives of those who receive it. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages
investors to seek the advice of a financial adviser. The appropriateness of an investment or strategy will depend on an investor's circumstances and objectives. The
securities, instruments, or strategies discussed in Morgan Stanley Research may not be suitable for all investors, and certain investors may not be eligible to purchase or
participate in some or all of them. Morgan Stanley Research is not an offer to buy or sell any security/instrument or to participate in any trading strategy. The value of and
income from your investments may vary because of changes in interest rates, foreign exchange rates, default rates, prepayment rates, securities/instruments prices,
market indexes, operational or financial conditions of companies or other factors. There may be time limitations on the exercise of options or other rights in
securities/instruments transactions. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that
may not be realized. If provided, and unless otherwise stated, the closing price on the cover page is that of the primary exchange for the subject company's
securities/instruments.
The fixed income research analysts, strategists or economists principally responsible for the preparation of Morgan Stanley Research have received compensation based
upon various factors, including quality, accuracy and value of research, firm profitability or revenues (which include fixed income trading and capital markets profitability
or revenues), client feedback and competitive factors. Fixed Income Research analysts', strategists' or economists' compensation is not linked to investment banking or
capital markets transactions performed by Morgan Stanley or the profitability or revenues of particular trading desks.
With the exception of information regarding Morgan Stanley, Morgan Stanley Research is based on public information. Morgan Stanley makes every effort to use reliable,
comprehensive information, but we make no representation that it is accurate or complete. We have no obligation to tell you when opinions or information in Morgan
Stanley Research change apart from when we intend to discontinue equity research coverage of a subject company. Facts and views presented in Morgan Stanley
Research have not been reviewed by, and may not reflect information known to, professionals in other Morgan Stanley business areas, including investment banking
personnel.
Morgan Stanley may make investment decisions or take proprietary positions that are inconsistent with the recommendations or views in this report.
To our readers in Taiwan: Information on securities/instruments that trade in Taiwan is distributed by Morgan Stanley Taiwan Limited ("MSTL"). Such information is for
your reference only. Information on any securities/instruments issued by a company owned by the government of or incorporated in the PRC and listed in on the Stock
Exchange of Hong Kong ("SEHK"), namely the H-shares, including the component company stocks of the Stock Exchange of Hong Kong ("SEHK")'s Hang Seng China
Enterprise Index is distributed only to Taiwan Securities Investment Trust Enterprises ("SITE"). The reader should independently evaluate the investment risks and is
solely responsible for their investment decisions. Morgan Stanley Research may not be distributed to the public media or quoted or used by the public media without the
express written consent of Morgan Stanley. To our readers in Hong Kong: Information is distributed in Hong Kong by and on behalf of, and is attributable to, Morgan
Stanley Asia Limited as part of its regulated activities in Hong Kong. If you have any queries concerning Morgan Stanley Research, please contact our Hong Kong sales
representatives. Information on securities/instruments that do not trade in Taiwan is for informational purposes only and is not to be construed as a recommendation or a
solicitation to trade in such securities/instruments. MSTL may not execute transactions for clients in these securities/instruments.
Morgan Stanley is not incorporated under PRC law and the research in relation to this report is conducted outside the PRC. Morgan Stanley Research does not
constitute an offer to sell or the solicitation of an offer to buy any securities in the PRC. PRC investors shall have the relevant qualifications to invest in such securities
and shall be responsible for obtaining all relevant approvals, licenses, verifications and/or registrations from the relevant governmental authorities themselves.
Morgan Stanley Research is disseminated in Brazil by Morgan Stanley C.T.V.M. S.A.; in Japan by Morgan Stanley MUFG Securities Co., Ltd. and, for Commodities
related research reports only, Morgan Stanley Capital Group Japan Co., Ltd; in Hong Kong by Morgan Stanley Asia Limited (which accepts responsibility for its contents);
in Singapore by Morgan Stanley Asia (Singapore) Pte. (Registration number 199206298Z) and/or Morgan Stanley Asia (Singapore) Securities Pte Ltd (Registration
number 200008434H), regulated by the Monetary Authority of Singapore (which accepts legal responsibility for its contents and should be contacted with respect to any
matters arising from, or in connection with, Morgan Stanley Research); in Australia to "wholesale clients" within the meaning of the Australian Corporations Act by
Morgan Stanley Australia Limited A.B.N. 67 003 734 576, holder of Australian financial services license No. 233742, which accepts responsibility for its contents; in
Australia to "wholesale clients" and "retail clients" within the meaning of the Australian Corporations Act by Morgan Stanley Smith Barney Australia Pty Ltd (A.B.N. 19
009 145 555, holder of Australian financial services license No. 240813, which accepts responsibility for its contents; in Korea by Morgan Stanley & Co International plc,
Seoul Branch; in India by Morgan Stanley India Company Private Limited; in Vietnam this report is issued by Morgan Stanley Singapore Holdings; in Canada by Morgan
Stanley Canada Limited, which has approved of and takes responsibility for its contents in Canada; in Germany by Morgan Stanley Bank AG, Frankfurt am Main and
Morgan Stanley Private Wealth Management Limited, Niederlassung Deutschland, regulated by Bundesanstalt fuer Finanzdienstleistungsaufsicht (BaFin); in Spain by
Morgan Stanley, S.V., S.A., a Morgan Stanley group company, which is supervised by the Spanish Securities Markets Commission (CNMV) and states that Morgan
Stanley Research has been written and distributed in accordance with the rules of conduct applicable to financial research as established under Spanish regulations; in
the United States by Morgan Stanley & Co. LLC, which accepts responsibility for its contents. Morgan Stanley & Co. International plc, authorized and regulated by the
Financial Services Authority, disseminates in the UK research that it has prepared, and approves solely for the purposes of section 21 of the Financial Services and
Markets Act 2000, research which has been prepared by any of its affiliates. Morgan Stanley Private Wealth Management Limited, authorized and regulated by the
Financial Services Authority, also disseminates Morgan Stanley Research in the UK. Private U.K. investors should obtain the advice of their Morgan Stanley & Co.
International plc or Morgan Stanley Private Wealth Management representative about the investments concerned. RMB Morgan Stanley (Proprietary) Limited is a



                                                                                                                                                                            7
                                                                                          MORGAN STANLEY RESEARCH

                                                                                          March 15, 2012
                                                                                          The Cyclical Aspect of the Current USD Rally




member of the JSE Limited and regulated by the Financial Services Board in South Africa. RMB Morgan Stanley (Proprietary) Limited is a joint venture owned equally by
Morgan Stanley International Holdings Inc. and RMB Investment Advisory (Proprietary) Limited, which is wholly owned by FirstRand Limited.
The trademarks and service marks contained in Morgan Stanley Research are the property of their respective owners. Third-party data providers make no warranties or
representations relating to the accuracy, completeness, or timeliness of the data they provide and shall not have liability for any damages relating to such data. The
Global Industry Classification Standard (GICS) was developed by and is the exclusive property of MSCI and S&P. Morgan Stanley bases projections, opinions, forecasts
and trading strategies regarding the MSCI Country Index Series solely on public information. MSCI has not reviewed, approved or endorsed these projections, opinions,
forecasts and trading strategies. Morgan Stanley has no influence on or control over MSCI's index compilation decisions. Morgan Stanley Research or portions of it may
not be reprinted, sold or redistributed without the written consent of Morgan Stanley. Morgan Stanley research is disseminated and available primarily electronically, and,
in some cases, in printed form. Additional information on recommended securities/instruments is available on request.
The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (DIFC Branch), regulated by the Dubai Financial Services
Authority (the DFSA), and is directed at Professional Clients only, as defined by the DFSA. The financial products or financial services to which this research relates will
only be made available to a customer who we are satisfied meets the regulatory criteria to be a Professional Client.
The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (QFC Branch), regulated by the Qatar Financial Centre
Regulatory Authority (the QFCRA), and is directed at business customers and market counterparties only and is not intended for Retail Customers as defined by the
QFCRA.
As required by the Capital Markets Board of Turkey, investment information, comments and recommendations stated here, are not within the scope of investment
advisory activity. Investment advisory service is provided in accordance with a contract of engagement on investment advisory concluded between brokerage houses,
portfolio management companies, non-deposit banks and clients. Comments and recommendations stated here rely on the individual opinions of the ones providing
these comments and recommendations. These opinions may not fit to your financial status, risk and return preferences. For this reason, to make an investment decision
by relying solely to this information stated here may not bring about outcomes that fit your expectations.

3-15-12 po




                                                                                                                                                                         8
                                                         MORGAN STANLEY RESEARCH




The Americas              Europe                         Japan                     Asia/Pacific
1585 Broadway             20 Bank Street, Canary Wharf   4-20-3, Ebisu,            1 Austin Road West
New York, NY 10036-8293   London E14 4AD                 Shibuya-ku,               Kowloon
United States             United Kingdom                 Tokyo 150-6008, Japan     Hong Kong
Tel: +1 (1)212 761 4000   Tel: +44 (0) 20 7 425 8000     Tel: +81 (0)3 5424 5000   Tel: +852 2848 5200




© 2012 Morgan Stanley

				
DOCUMENT INFO
Shared By:
Categories:
Tags: MORGAN, STANLEY
Stats:
views:48
posted:3/28/2012
language:English
pages:9
Description: MORGAN STANLEY- Current USD Rally