'Euro is doomed' says Saxo Bank chief, as currency woes resurface


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Lars Christensen, co-chief executive of Denmark's Saxo Bank, said the euro's recent rally is illusory and the shared currency is set to fail because the continent hasn't supported it with a fiscal union.

"The whole thing is doomed," Mr Christensen said yesterday in an interview at the bank's Dubai office. "Right now we're in one of those fake solutions where people think that the problem is contained or being addressed, which it isn't at all."

The euro has gained 8.2 per cent versus the dollar in the past six months and reached as high as $1.3711 on February 1, the strongest since November 14, 2011. The European Central Bank forecasts the euro-area economy will shrink 0.3 per cent this year and ECB President Mario Draghi said on February 7 that the currency's gains pose a risk for growth and inflation.

While the euro has strengthened, the economies of Germany, France and Italy all shrank more than estimated in the fourth quarter. Ministers from the 17-member euro area met during the week to discuss aid to Cyprus and Greece as a tightening election contest in Italy and a political scandal in Spain threaten to reignite the region's debt crisis.

"I'd be a bigger seller of the euro at anything near 1.4," according to Christensen, who said he isn't making any speculative bets against the currency.

The euro declined 0.1 per cent to 1.3343 against the dollar, falling for a fourth day.

France is grappling with shrinking investment, job cuts by companies such as Renault and pressure from European partners to speed budget cuts. While Germany expanded 0.7 per cent last year, France posted no growth and Italy probably contracted more than 2 per cent, the weakest in the euro area after Greece and Portugal, according to the European Commission.

The economy is on the brink of its third recession in four years and the highest joblessness since 1998. Prime Minister Jean-Marc Ayrault said on February 13 the country won't make its budget-deficit target of 3 per cent of gross domestic product this year as the economy fails to generate growth and taxes.

"Another possible fallout is getting rid of some of the countries that are being ruined by being in the euro, notably the southern European economies," Mr Christensen said. "People have been dramatically underestimating the problems the French are going to get from this. Once the French get into a full-scale crisis, it's over. Even the Germans cannot pay for that one and probably will not."

Spanish and Italian bonds rose last week as debt sales allayed concern the nations may struggle to raise funds before Italy goes to the polls to elect a new prime minister. Yields on Spain's 10-year bonds fell for the first week in five as European Central Bank President Mario Draghi said the country had achieved "enormous progress" in its reforms. The spread between Spanish 10-year bonds and comparable German securities decreased two basis points to 354 basis points.

"It's the political world that has been extremely supportive of the euro, not for economic reasons but for political reasons," said Christensen, a long-time critic of the single currency and who now lives in Switzerland.

TPG Capital, the private equity firm started by David Bonderman, bought a 30 per cent stake in Saxo Bank in August 2011 for about $560 million. Christensen and co-founder and co-cheif executive Kim Fournais maintain majority ownership of the company.

The Hellerup, Denmark-based bank said in August that first half profit dropped to 44 million kroner ($7.8 million) from 346 million kroner a year earlier.

THREE
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ELIO

Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett

Directors: Madeline Sharafian, Domee Shi, Adrian Molina

Rating: 4/5

RESULT

Manchester City 5 Swansea City 0
Man City:
D Silva (12'), Sterling (16'), De Bruyne (54' ), B Silva (64' minutes), Jesus (88')

Result

2.15pm: Maiden Dh75,000 1,950m; Winner: Majestic Thunder, Tadhg O’Shea (jockey), Satish Seemar (trainer).

2.45pm: Handicap Dh80,000 1,800m; Winner: Tailor’s Row, Royston Ffrench, Salem bin Ghadayer.

3.15pm: Handicap Dh85,000 1,600m; Winner: Native Appeal, Adam McLean, Doug Watson.

3.45pm: Handicap Dh115,000 1,950m; Winner: Conclusion, Antonio Fresu, Musabah Al Muhairi.

4.15pm: Handicap Dh100,000 1,400m; Winner: Pilgrim’s Treasure, Tadhg O’Shea, Satish Seemar.

4.45pm: Maiden Dh75,000 1,400m; Winner: Sanad Libya, Richard Mullen, Satish Seemar.

5.15pm: Handicap Dh90,000 1,000m; Winner: Midlander, Richard Mullen, Satish Seemar

MOUNTAINHEAD REVIEW

Starring: Ramy Youssef, Steve Carell, Jason Schwartzman

Director: Jesse Armstrong

Rating: 3.5/5

Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
  • Premier League-standard football pitch
  • 400m Olympic running track
  • NBA-spec basketball court with auditorium
  • 600-seat auditorium
  • Spaces for historical and cultural exploration
  • An elevated football field that doubles as a helipad
  • Specialist robotics and science laboratories
  • AR and VR-enabled learning centres
  • Disruption Lab and Research Centre for developing entrepreneurial skills
BRAZIL%20SQUAD
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Day 5, Abu Dhabi Test: At a glance

Moment of the day When Dilruwan Perera dismissed Yasir Shah to end Pakistan’s limp resistance, the Sri Lankans charged around the field with the fevered delirium of a side not used to winning. Trouble was, they had not. The delivery was deemed a no ball. Sri Lanka had a nervy wait, but it was merely a stay of execution for the beleaguered hosts.

Stat of the day – 5 Pakistan have lost all 10 wickets on the fifth day of a Test five times since the start of 2016. It is an alarming departure for a side who had apparently erased regular collapses from their resume. “The only thing I can say, it’s not a mitigating excuse at all, but that’s a young batting line up, obviously trying to find their way,” said Mickey Arthur, Pakistan’s coach.

The verdict Test matches in the UAE are known for speeding up on the last two days, but this was extreme. The first two innings of this Test took 11 sessions to complete. The remaining two were done in less than four. The nature of Pakistan’s capitulation at the end showed just how difficult the transition is going to be in the post Misbah-ul-Haq era.

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