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David Woo

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David Woo
Alma materColumbia University
Tufts University
OccupationHead of Global Rates & Currencies Research at the Bank of America[1]
Years activeJuly 2010 – Present

David Woo is the Head of Global Rates & Currencies Research at Bank of America Merrill Lynch, where he researches world business markets.[2] Woo has analyzed several areas of economics, including currency wars,[3][4] Bitcoin,[5][6] the renminbi,[7] the Federal Reserve System,[8] the future of the Euro,[9] the relationship between weather and the USD,[10] the American economic renaissance,[11] and the Fed rate hiking cycle.[12]

Bitcoin

David Woo has analyzed Bitcoin, stating that it "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-flight mind at a major financial institution assessing it in a serious way, and coming to the conclusion that it could be the real deal."[5] Woo further stated that "As a medium of exchange, Bitcoin has clear potential for growth".[6] However, Woo put the upper bound of Bitcoin’s fair value at $1300,[13] stating that "Bitcoin is highly volatile, the result of speculation activities, and that's hindering its general acceptance as a form of payment."[13]

Economy of China

Work on Chinese equities has also been a major project of Woo's.[14] Woo has stated that "China’s rally has become so big" and "called it the world’s largest bubble since dot-com boom of the late 1990s".[14] However, he stated that "Chinese shares may drop as much as 30 percent", thus creating a "knock on effect on the whole world economy".[14] Woo also predicted a devaluation of the renminbi, holding that “China cannot allow for looser capital flows while maintaining its monetary policy targets, which include limiting the yuan’s moves against the US dollar.”[7] Woo maintains that "All roads lead to more currency devaluation from China... because the authorities' desire to have the yuan included in the IMF's basket of reserve currencies has and will continue to play a role in dictating monetary policy and foreign exchange management in the world's second-largest economy."[8] Moreover, David Woo has called the Shenzhen Stock Exchange as "the world’s largest stock market bubble since the dot-com boom of the 1990s."[15]

Economy of Europe

The future of the Euro is a field, which Woo has studied.[9] In a cost-benefit analysis of whether individual members of the Eurozone should stay with the euro, David Woo and Athanasios Vamvakidis concluded that “Italy and Ireland emerge as the countries with the greatest incentive to exit.” They argued that a much weaker euro was necessary to reduce the incentive of any country to exit.[16]

Economy of the United States

David Woo has hypothesized that "that rising U.S. crude and natural gas production will likely lift the American greenback against major currencies."[11] Woo has argued that "Rising energy production is helping the U.S. dollar in three ways":[11]

  • 1) Shrinking current account deficit, at 2.8% of GDP – the lowest since the 1990s.[11]
  • 2) Energy production is boosting GDP growth. Mr Woo. estimates oil and gas extraction added around 0.3 percentage points to GDP growth last year.[11]
  • 3) Reduce negative correlation between the American dollar and oil prices, easing inflation and making U.S. assets more attractive.[11]

Woo has also developed a "winter-weather index, based on state-level data going back to 1960" that allows him to predict the weakness of different global currencies, including that of the United States.[10] He also cautioned that "The U.S. today is only 15 percent of global GDP" and as a result, he has "stressed that monetary policymakers needed to keep a more international perspective."[12]

References

  1. ^ "David Woo On Market Rally". MSN. 27 August 2015. Retrieved 15 October 2015. David Woo, head of global rates and currencies research at Bank of America Merrill Lynch tells Ian King what's behind a rally in stocks after a torrid week.
  2. ^ "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.
  3. ^ Sidibe, Nana (29 May 2015). "We are in the middle of a currency war: Analyst". CNBC. Retrieved 15 October 2015. There is a currency war going on—one in which the Federal Reserve is the least able to play, said David Woo, head of global interest rates and currencies research at Bank of America Merrill Lynch, on Friday.
  4. ^ Simon Kennedy (6 February 2015). "Currency Devaluations Are an Undeclared War -". Bloomberg L.P. Bloomberg Business. Retrieved 14 October 2015. The global currency war is threatening to prove a silent killer. So says David Woo, head of global rates and currencies research at Bank of America Merrill Lynch in New York. While some question the existence of any conflict -- arguing that falling exchange rates merely reflect efforts by central banks to spur lackluster domestic economies -- Woo expresses concern. "There is a growing consensus in the market that an unspoken currency war has broken out," he said in a report to clients this week. "The reason why this is a war is that it is ultimately a zero-sum game -- someone gains only because someone else will lose."
  5. ^ a b Weisenthal, Joe (5 December 2013). "David Woo On Bitcoin". Business Insider. Retrieved 14 October 2015.
  6. ^ a b 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.
  7. ^ a b 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.
  8. ^ a b 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.
  9. ^ a b 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.
  10. ^ a b Detrixhe, John (26 February 2014). "Dollar Rally Springs Eternal as Winter Abates, BofA's Woo Says - Bloomberg Business". Bloomberg L.P. Retrieved 14 October 2015. Woo's winter-weather index, based on state-level data going back to 1960, shows this winter trailing only those of 1977 and 2009 in terms of severity. Weather patterns this year most closely resemble the 2009-2010 winter, suggesting the yen may weaken to 107 against the dollar, the bank said.
  11. ^ a b c d e f Hussain, Yadhullah (11 March 2013). "Energy boom bullish for U.S. dollar: BAML analyst". Financial Post. Retrieved 14 October 2015.
  12. ^ a b "BofA's Woo: A Fed Rate Hike Now Would Be 'a Mistake'". Newsmax Media. 15 September 2015. Retrieved 14 October 2015.
  13. ^ a b Lopez, Ricardo (6 December 2013). "Bitcoin has clear 'potential for growth,' currency analyst says". Los Angeles Times. Retrieved 14 October 2015.
  14. ^ a b c Hu, Fox; Keene, Tom. "Why BofA's Global Bond Guru Is Fixated on Chinese Equities". 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."
  15. ^ 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.
  16. ^ Nixon, Simon (12 July 2012). "Italy and Germany's Endgame for the Euro". The Wall Street Journal. Retrieved 14 October 2015.
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