The latest Global Investment Strategy Weekly Report entitled “Helicopter Money: A Semi-Hostile Q&A” examines this very topical issue and concludes the following points:
- Helicopter money is coming, and once deployed, will prove to be much more successful than most people imagine.
- Investors should stay long Japanese and German inflation swaps.
- USD/JPY and EUR/USD are ultimately likely to reach 140 and 0.9, respectively, over the next two years.
- The U.S. economy will remain resilient enough to make helicopter money unnecessary but a strengthening dollar will greatly curtail the ability of the Fed to raise rates.
- Investors should overweight Treasurys relative to bunds and JGBs.
- Helicopter money will benefit gold as well as the beleaguered European and Japanese stock markets.