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Implications of Export Driven Recoveries

With most countries feeling that their economies are becoming more stable there is a greater focus on how to control their growing deficits. Countries such as Germany, Japan, and China are focusing on exports to drive their countries growth in the future.  The news by president Obama stating that the US will aim to double its export in the next 5 years shows that the US is planning on using exports as a method to reduce the deficit as well. 
The Export led method of reducing the deficits in these countries would benefit from having a weak currency behind it. This would make the deficits of these countries smaller in relation to other currencies as well as make their countries exports cheaper. This could bring about a global shift in the way these countries interact and do business.
Despite the rhetoric about the US wanting a strong dollar, the agenda going forward will be much easier to achieve with a currency cheaper than the countries trading partners. With the Greek government in dire need of assistance and Germany being the country most likely to help you could bet that the strategy taken to stabilize the EU will come with a byproduct of a weak currency. The Japanese economy has already expressed concern about the strength of the Yen around the levels that the currency is currently trading at.
With all of these countries striving for a weaker currency to boost their exports there are opportunities that will surface that you could take advantage of. One winner of these countries attempting an export driven recovery are the exporters themselves. Look into exporters in countries such as Japan where valuations are already cheap and the most aggressive stance has been taken as far as currency devaluation. Transport countries could also see a boost in demand from good being shipped worldwide, and raw materials are being purchased to fuel these surges in export productivity.
A big concern that needs to be noted is the reluctance for countries to raise interest rates as aggressively as the might be required, this could result in rising inflation in those countries.
 
 
Opportunities:
                Transport companies
                Exporters
 
Concerns:
                Inflation


Disclosure: No Positions