David Woo

Last updated
David Woo
Alma mater Columbia University
Tufts University
OccupationCEO of David Woo Unbound [1]
Years activeJuly 2021 – Present

David Woo is the CEO of David Woo Unbound, a global forum devoted to the promotion of fact-based debates about markets, politics, and economics. Woo was previously the Head of Global Interest Rates, Foreign Exchange, Emerging Market Fixed Income & Economics Research at Bank of America, where he researched the world financial markets. Woo is known for his contrarian calls on the 2016 United States elections, [2] the 2015 devaluation of the renminbi, [3] Bitcoin, [4] [5] and the future of the Euro. [6] He was voted as one of the twelve smartest people on Wall Street in 2013 by Business Insider. [7]

Contents

The 2016 US election

In September 2016, Woo said "markets were failing to adequately price in the probability of a Trump win" [2] and predicted that "if Trump won, it would bring about a stronger dollar and higher rates thanks to fiscal stimulus". [8]

The 2015 renminbi devaluation

In April 2015, Woo argued that the renminbi was set to fall because "China cannot allow for looser capital flows while maintaining its monetary policy targets, which include limiting the yuan's moves against the US dollar. [3] In June 2015, Woo called the Chinese equity rally the "world’s largest bubble since dot-com boom of the late 1990s" [9] and predicted that Chinese shares "may drop as much as 30%", and creating a "knock-on effect on the whole world economy." [10] After the August 2015 renminbi devaluation, Woo predicted the renminbi could decline further by as much as 10% against the dollar in 2016. [11] Woo also argued that this would have global repercussions, including a "shallower Fed cycle." [12] [13]

Bitcoin

In December 2013, Woo argued that Bitcoin "can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers", an opinion that Joe Weisenthal said "represents a top-fligh kappat mind at a major financial institution assessing it in a serious way, and coming to the conclusion that it could be the real deal." [4] [5] However, Woo put the upper bound of Bitcoin’s fair value at $1300, [14] stating that "Bitcoin is highly volatile, the result of speculation activities, and that's hindering its general acceptance as a form of payment." [14]

The 2012 European debt crisis

In July 2012, in a cost-benefit analysis of whether individual members of the Eurozone should stay with the euro, David Woo and Athanasios Vamvakidis argued that “Italy and Ireland emerge as the countries with the greatest incentive to exit.” They concluded that a much weaker euro was necessary to reduce the incentive of any country to exit. [6]

US energy independence and the dollar

In March 2013, Woo argued that "rising U.S. crude oil and natural gas production will likely lift the American greenback against major currencies" by shrinking the US current account deficit, boosting investment and reducing the correlation between the dollar and oil prices. [15]

Related Research Articles

A currency is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general definition is that a currency is a system of money in common use within a specific environment over time, especially for people in a nation state. Under this definition, the British Pound Sterling (£), euros (€), Japanese yen (¥), and U.S. dollars (US$)) are examples of (government-issued) fiat currencies. Currencies may act as stores of value and be traded between nations in foreign exchange markets, which determine the relative values of the different currencies. Currencies in this sense are either chosen by users or decreed by governments, and each type has limited boundaries of acceptance; i.e., legal tender laws may require a particular unit of account for payments to government agencies.

<span class="mw-page-title-main">Renminbi</span> Official currency of the Peoples Republic of China

The renminbi is the official currency of the People's Republic of China and one of the world's most traded currencies, ranking as the fifth most traded currency in the world as of April 2022.

<span class="mw-page-title-main">Reserve currency</span> Currencies held by monetary authorities as part of their foreign exchange reserves

A reserve currency is a foreign currency that is held in significant quantities by central banks or other monetary authorities as part of their foreign exchange reserves. The reserve currency can be used in international transactions, international investments and all aspects of the global economy. It is often considered a hard currency or safe-haven currency.

<span class="mw-page-title-main">Currency substitution</span> Use of a foreign currency in parallel to or instead of a domestic currency

Currency substitution is the use of a foreign currency in parallel to or instead of a domestic currency. The process is also known as dollarization or euroization when the foreign currency is the dollar or the euro, respectively.

The Hong Kong dollar is the official currency of the Hong Kong Special Administrative Region. It is subdivided into 100 cents or 1000 mils. The Hong Kong Monetary Authority is the monetary authority of Hong Kong and the Hong Kong dollar.

<span class="mw-page-title-main">Balance of payments</span> Difference between the inflow and outflow of money to a country at a given time

In international economics, the balance of payments of a country is the difference between all money flowing into the country in a particular period of time and the outflow of money to the rest of the world. These financial transactions are made by individuals, firms and government bodies to compare receipts and payments arising out of trade of goods and services.

<span class="mw-page-title-main">Digital currency</span> Currency stored on electronic systems

Digital currency is any currency, money, or money-like asset that is primarily managed, stored or exchanged on digital computer systems, especially over the internet. Types of digital currencies include cryptocurrency, virtual currency and central bank digital currency. Digital currency may be recorded on a distributed database on the internet, a centralized electronic computer database owned by a company or bank, within digital files or even on a stored-value card.

<span class="mw-page-title-main">Peter Schiff</span> Stock broker, radio personality, and author

Peter David Schiff is an American stock broker, financial commentator, and radio personality. He is CEO and chief global strategist of Euro Pacific Capital Inc., a broker-dealer based in Westport, Connecticut. He is also involved in various roles in other financial services companies including Euro Pacific Asset Management, an independent investment advisor; Schiff Gold ; a precious metals dealer; and Euro Pacific Bank, a full-reserve bank.

<span class="mw-page-title-main">Foreign-exchange reserves of China</span> Chinas holdings of foreign debt and currencies

The foreign exchange reserves of China are the state of foreign exchange reserves held by the People's Republic of China, comprising cash, bank deposits, bonds, and other financial assets denominated in currencies other than China's national currency. In July 2020, China's foreign exchange reserves totaled US$3.15 trillion, which is the highest foreign exchange reserves of any country.

<span class="mw-page-title-main">Currency intervention</span> Monetary policy operation

Currency intervention, also known as foreign exchange market intervention or currency manipulation, is a monetary policy operation. It occurs when a government or central bank buys or sells foreign currency in exchange for its own domestic currency, generally with the intention of influencing the exchange rate and trade policy.

<span class="mw-page-title-main">Currency war</span> Competition between nations to gain competitive advantage by manipulating monetary supply

Currency war, also known as competitive devaluations, is a condition in international affairs where countries seek to gain a trade advantage over other countries by causing the exchange rate of their currency to fall in relation to other currencies. As the exchange rate of a country's currency falls, exports become more competitive in other countries, and imports into the country become more and more expensive. Both effects benefit the domestic industry, and thus employment, which receives a boost in demand from both domestic and foreign markets. However, the price increases for import goods are unpopular as they harm citizens' purchasing power; and when all countries adopt a similar strategy, it can lead to a general decline in international trade, harming all countries.

<span class="mw-page-title-main">Renminbi currency value</span> Value of the currency of China

Renminbi currency value is a debate affecting the Chinese currency unit, the renminbi. The renminbi is classified as a fixed exchange rate currency "with reference to a basket of currencies", which has drawn attention from nations which have freely floated currency and has become a source of trade friction with Western nations.

<span class="mw-page-title-main">International use of the U.S. dollar</span> Use of US dollars around the world

The United States dollar was established as the world's foremost reserve currency by the Bretton Woods Agreement of 1944. It claimed this status from sterling after the devastation of two world wars and the massive spending of the United Kingdom's gold reserves. Despite all links to gold being severed in 1971, the dollar continues to be the world's foremost reserve currency. Furthermore, the Bretton Woods Agreement also set up the global post-war monetary system by setting up rules, institutions and procedures for conducting international trade and accessing the global capital markets using the US dollar.

The Currency War of 2009–2011 was an episode of competitive devaluation which became prominent in the financial press in September 2010. Competitive devaluation involves states competing with each other to achieve a relatively low valuation for their own currency, so as to assist their domestic industry. With the financial crises of 2008 the export sectors of many emerging economies have experienced declining orders, and from 2009 several states began or increased their levels of intervention to push down their currencies.

Since the late-2000s, the People's Republic of China (PRC) has sought to internationalize its official currency, the Renminbi (RMB). RMB internationalization accelerated in 2009 when China established the dim sum bond market and expanded Cross-Border Trade RMB Settlement Pilot Project, which helps establish pools of offshore RMB liquidity. The RMB was the 8th-most-traded currency in the world in 2013 and the 7th-most-traded in early 2014. By the end of 2014, RMB ranked 5th as the most traded currency, according to SWIFT's report, at 2.2% of SWIFT payment behind JPY (2.7%), GBP (7.9%), EUR (28.3%) and USD (44.6%). In February 2015, RMB became the second most used currency for trade and services, and reached the ninth position in forex trading. The RMB Qualified Foreign Institutional Investor (RQFII) quotas were also extended to five other countries — the UK, Singapore, France, Korea, Germany, and Canada, each with the quotas of ¥80 billion except Canada and Singapore (¥50bn). Previously, only Hong Kong was allowed, with a ¥270 billion quota.

<span class="mw-page-title-main">Russian financial crisis (2014–2016)</span> Period of devaluation of the Russian rouble, linked to the Crimean conflict

The financial crisis in Russia in 2014–2016 was the result of the sharp devaluation of the Russian rouble beginning in the second half of 2014. A decline in confidence in the Russian economy caused investors to sell off their Russian assets, which led to a decline in the value of the Russian rouble and sparked fears of a financial crisis. The lack of confidence in the Russian economy stemmed from at least two major sources. The first is the fall in the price of oil in 2014. Crude oil, a major export of Russia, declined in price by nearly 50% between its yearly high in June 2014 and 16 December 2014. The second is the result of international economic sanctions imposed on Russia following Russia's annexation of Crimea, the War in Donbas and the broader Russo-Ukrainian War.

The 2015-2016 Chinese stock market turbulence began with the popping of the stock market bubble on 12 June 2015 and ended in early February 2016. A third of the value of A-shares on the Shanghai Stock Exchange was lost within one month of the event. Major aftershocks occurred around 27 July and 24 August's "Black Monday". By 8–9 July 2015, the Shanghai stock market had fallen 30 percent over three weeks as 1,400 companies, or more than half listed, filed for a trading halt in an attempt to prevent further losses. Values of Chinese stock markets continued to drop despite efforts by the government to reduce the fall. After three stable weeks the Shanghai index fell again on 24 August by 8.48 percent, marking the largest fall since 2007.

In 1945, China cofounded the International Monetary Fund (IMF) with 34 other nations. In April 1980, the People's Republic of China, established a formal relationship with the IMF. The Chinese-IMF relationship mainly operates around affairs associated with IMF governance and the IMF Special Drawing Rights (SDR).

Bitcoin is a digital asset designed by its pseudonymous inventor, Satoshi Nakamoto, to work as a currency.

<span class="mw-page-title-main">Digital renminbi</span> Digital currency issued by Chinas central bank

Digital renminbi, or Digital Currency Electronic Payment, is a central bank digital currency issued by China's central bank, the People's Bank of China. It is the first digital currency to be issued by a major economy, undergoing public testing as of April 2021. The digital RMB is legal tender and has equivalent value with other forms of renminbi, also known as the Chinese yuan (CNY), such as bills and coins.

References

  1. ↑ "The dangerous groupthink stalking Wall Street". 10 September 2021.
  2. 1 2 Gurdus, Elizabeth (8 December 2016). "Merrill Lynch analyst got a standing ovation from 300 of his co-workers the morning after the election for nailing what would happen". CNBC . Retrieved 8 December 2016. Woo said markets were failing to accurately price in the probability of a Trump win, almost treating the election as a "nonevent." He said then that if Trump won, it would bring about a stronger dollar thanks to fiscal stimulus.
  3. 1 2 Adinolfi, Joseph (27 April 2015). "Why one of Wall Street's top analysts is betting against the yuan - MarketWatch". MarketWatch . Retrieved 14 October 2015. In a note to clients, David Woo, head of global rates and currencies research at Bank of America Merrill, said China cannot allow for looser capital flows while maintaining its monetary-policy targets, which include limiting the yuan’s moves against the U.S. dollar.
  4. 1 2 Weisenthal, Joe (5 December 2013). "David Woo On Bitcoin". Business Insider . Retrieved 14 October 2015.
  5. 1 2 Alden, William (5 December 2013). "For Bitcoin, a Setback in China and an Endorsement on Wall Street". The New York Times . Retrieved 14 October 2015.
  6. 1 2 Nixon, Simon (12 July 2012). "Italy and Germany's Endgame for the Euro". The Wall Street Journal . Retrieved 14 October 2015. The risk of a euro-zone breakup may actually be rising rather than falling, according to Bank of America Merrill Lynch strategists David Woo and Athanasios Vamvakidis. Using game theory to consider how the situation might evolve, they believe the crisis will boil down to a game of bluff between Italy and Germany in which neither country has an incentive to back down.
  7. ↑ "The 12 Smartest People On Wall Street". Business Insider. 1 June 2013. Retrieved 14 October 2015. As head of global rates and currencies research at BAML, David Woo has to keep track of a lot of different things at once – and for those interested in global macro, Woo's perspective is a must-read. Recently, he flagged developments across major world markets as inconsistent, warning of a global slowdown and a major market re-alignment. Woo remains cautious on the outlook for the U.S. economy in the short term, along with its implication for risk assets. However, he says that if the economy begins to improve along the lines of what stocks are already pricing in, then the euro could be the biggest beneficiary.
  8. ↑ Kawa, Luke (12 September 2016). "'Strategist: If Trump Wins, 'The U.S. Economy Would Take Off in a Big Way'". Bloomberg . Retrieved 12 September 2016. David Woo says investors are still underestimating the real estate mogul's chances of ascending to the highest office in the land, and what a seismic change this could be for markets and the world's largest economy.
  9. ↑ Swanson, Ana (24 June 2015). "Meet the world's biggest stock market bubble since the dot-com boom". The Washington Post . Retrieved 14 October 2015. No other stock market has ever grown this much in dollar terms over a 12-month period. David Woo, the head of Global Rates and Currencies Research at Bank of America, has called it the world’s largest stock market bubble since the dot-com boom of the 1990s.
  10. ↑ Hu, Fox; Keene, Tom (18 June 2015). "Why BofA's Global Bond Guru Is Fixated on Chinese Equities". Bloomberg.com. Bloomberg L.P. Retrieved 14 October 2015. Woo said China’s rally has become so big -- he called it the world’s largest bubble since dot-com boom of the late 1990s -- that the eventual collapse will have consequences for markets around the world. Chinese shares may drop as much as 30 percent when the mania ends, weighing on consumers who have been an important driver of growth in Asia’s largest economy, Woo said. He expects the selloff will be bullish for the dollar and U.S. Treasuries. It will have a “knock on effect on the whole world economy,” Woo said. “The only thing that’s holding up the Chinese economy are the Chinese consumers right now. The Chinese consumers are all involved in the Chinese stock market.”
  11. ↑ Nguyen, Lananh (4 December 2016). "Boring Wall Street Analyst Notes Are Out. Bold, Funny Are In". Bloomberg . Retrieved 4 December 2016. In "The Great Divorce," published in November 2015, Woo outlined the biggest call of his career, arguing that China’s currency could tumble as much as 10 percent against the dollar in 2016. The estimate was the fourth-most pessimistic of more than 40 forecasts. The onshore yuan has fallen more than 7 percent since, reaching an eight-year low last month and leaving rival strategists racing to catch up.
  12. ↑ Kawa, Luke (23 November 2015). "Bank of America: The 'Great Divorce' Between the World's Two Largest Economies Will Drive Currency and Rates Markets in 2016". Bloomberg . Retrieved 23 November 2015. The strategist believes that the Federal Reserve's terminal rate—the ceiling for how high its policy rate will go—will be dragged down by the decline in China's currency..
  13. ↑ Kawa, Luke (6 October 2015). "Bank of America's Woo: "China Is Still More Important Than The Fed" - Yahoo Finance". Yahoo! Finance. Retrieved 14 October 2015.
  14. 1 2 Lopez, Ricardo (6 December 2013). "Bitcoin has clear 'potential for growth,' currency analyst says". Los Angeles Times . Retrieved 14 October 2015.
  15. ↑ Hussain, Yadhullah (11 March 2013). "Energy boom bullish for U.S. dollar: BAML analyst". Financial Post . Retrieved 14 October 2015.
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