[R-G] Supermodel Bundchen Joins Hedge Funds Dumping Dollars

[Yoshie Furuhashi]

<http://www.bloomberg.com/apps/news?pid=20601087&sid=aCs.keWwNdiY&refer=home>
Supermodel Bundchen Joins Hedge Funds Dumping Dollars (Update3)

By Bo Nielsen and Adriana Brasileiro
Enlarge Image/Details

Nov. 5 (Bloomberg) -- Gisele Bundchen wants to remain the world's
richest model and is insisting that she be paid in almost any currency
but the U.S. dollar.

Like billionaire investors Warren Buffett and Bill Gross, the
Brazilian supermodel, who Forbes magazine says earns more than anyone
in her industry, is at the top of a growing list of rich people who
have concluded that the currency can only depreciate because Americans
led by President George W. Bush are living beyond their means.

Even after the dollar lost 34 percent since 2001, the biggest
investors and most accurate forecasters say it will weaken further as
home sales fall and the Federal Reserve cuts interest rates. The
dollar plummeted to its lowest ever last week against the euro,
Canadian dollar, Chinese yuan and the cheapest in 26 years against the
British pound.

``We've told all of our clients that if you only had one idea, one
investment, it would be to buy an investment in a non- dollar
currency,'' said Gross, the chief investment officer of Pacific
Investment Management Co. in Newport Beach, California, and manager of
the world's biggest bond fund. ``That should be on top of the list,''
said Gross, whose firm is a unit of Munich- based insurer Allianz SE.

Bundchen's Demands

The dollar fell 0.8 percent last week and touched $1.4528 per euro,
the weakest since the euro's debut in 1999. It traded at $1.4476 at
5:47 p.m. in New York. The dollar lost 2.8 percent last week to 93.47
Canadian cents and 1.8 percent to $2.09 per British pound. The Fed's
U.S. Trade Weighted Major Currency Index measuring the dollar's
performance versus seven currencies, such as Japan's, slid to a record
low of 72.22.

BNP Paribas chief currency strategist Hans-Guenter Redeker, the most
accurate foreign-exchange forecaster last quarter in a Bloomberg
survey, said the dollar may drop to $1.50 per euro by year-end. The
median estimate of 42 strategists surveyed by Bloomberg is for the
currency to end the year at $1.43. Among those surveyed last week, the
forecast ranges from $1.42 to $1.50.

When Bundchen, 27, signed a contract in August to represent Pantene
hair products for Cincinnati-based Procter & Gamble Co., she demanded
payment in euros, according to Veja, Brazil's biggest weekly magazine.
She'll also get euros for the deal she reached last October with Dolce
& Gabbana SpA in Milan to promote the Italian designer's new
fragrance, The One, Veja reported. Bundchen earned $33 million in the
year through June, Forbes reported in July.

`More Attractive'

``Contracts starting now are more attractive in euros because we don't
know what will happen to the dollar,'' Patricia Bundchen, the model's
twin sister and manager in Brazil, said in a telephone interview in
September from Sao Paulo. She declined to discuss details of the
arrangements last week.

``Gisele has contracts in dollars,'' said Anne Nelson, Bundchen's
agent in New York at IMG Models, in an interview today. ``When she
works in Europe she gets paid in euros, when she works in the U.S. she
gets paid in dollars, when she works in Brazil she gets paid in reais,
and so on and so forth.''

Procter & Gamble's Sao Paulo-based external relations director for
Brazil, Andre Quadra, said he couldn't give details of the Pantene
contract because of a confidentiality agreement.

Analysts in a Bloomberg survey expect the dollar to strengthen in
coming months as stronger-than-forecast reports suggest U.S. consumers
will keep the economy out of recession. Payrolls grew by 166,000 in
October, double the median forecast of economists in a Bloomberg
survey.

U.S. Economy

The dollar will rise to $1.43 per euro this year and $1.35 by the end
of 2008, according to the median estimate in the survey.

``So far the data has shown the U.S. economy may not be slowing to the
extent the majority of the market had expected,'' said Omer Esiner, an
analyst at currency-trading company Ruesch International Inc. in
Washington who expects the U.S. currency to strengthen to as much as
$1.38 per euro. ``That could temper policy easing down the road and
lend support for the dollar.''

Buffett, whom Forbes in April ranked as the world's third- richest
person behind Bill Gates and Carlos Slim, told reporters in South
Korea last month that he is bearish on the U.S. currency.

``We still are negative on the dollar relative to most major
currencies, so we bought stocks in companies that earn their money in
other currencies,'' Buffett said Oct. 25. Buffett, 77, is chairman of
Omaha, Nebraska-based Berkshire Hathaway Inc.

`Moving to Asia'

Jim Rogers, a former partner of investor George Soros, said last month
he's selling his house and all his possessions in the U.S. currency to
buy China's yuan.

``The dollar is collapsing,'' Rogers said last week in an interview.
``I'm moving to Asia because moving to Asia now is like moving to New
York in 1907 or London in 1807. It's the wave of the future.''

The dollar is falling as investors seek better returns outside the
U.S. Developing Asian nations including China and India will grow 9.8
percent this year, compared with 1.9 percent for the U.S., the
International Monetary Fund said last month.

China, India and Russia accounted for half the global expansion over
the past year, and the euro region will expand 2.5 percent in 2007,
outpacing the U.S. for the first time since 2001, the Washington-based
IMF estimates.

``The world has learned to live with a weak dollar,'' said Jay Bryson,
a former Fed analyst who is now a global economist in Charlotte, North
Carolina, at Wachovia Corp., the fourth-largest U.S. bank. ``It's not
worried. It doesn't rely on the U.S. as much as it once did.''

Dollar Decline

Bryson forecasts the dollar will weaken to $1.50 per euro by the end of June.

The U.S. currency dropped in the past two months as the Fed cut its
target rate for overnight loans between banks twice to keep a decline
in home sales from starting a recession. The central bank reduced the
rate by three-quarters of a percentage point to 4.5 percent, including
a quarter-point last week. The National Association of Realtors trade
group in Washington said on Oct. 10 existing home sales may fall 11
percent this year.

Lower rates have made yields on U.S. debt less attractive. U.S.
two-year Treasuries yield 0.30 percentage point less than German
government bonds of similar maturity. The last time Treasuries yielded
less than bunds was 2004.

Economic Cushion

The weaker currency has cushioned the U.S. economy during the worst
housing recession in 16 years. Gross domestic product grew at an
annual rate of 3.9 percent in the third quarter, the most in more than
a year, the Commerce Department said Oct. 31 in Washington.

The five-year, 67 percent drop against the Canadian dollar has made it
cheaper for fans from Toronto to drive the 110 miles (177 kilometers)
to Orchard Park, New York, to watch the Buffalo Bills play football.

Canadians account for 11 percent of the team's season tickets this
year, up from 6.5 percent in 2005, according to Scott Berchtold, the
Bills' vice president of communications. At yesterday's annual Canada
Day game, where the Bills beat the Cincinnati Bengals, a record 23
percent of the 70,745 fans were from Canada, he estimated.

``When the Canadian dollar was down around 65 cents, we didn't get
anybody,'' Ralph Wilson Jr., the team's owner, said in an interview.
``When the dollar fell, we starting getting some people.'' The
Canadian dollar bought 61.76 U.S. cents in 2002.

Cheaper Abroad

The dollar's drop also makes American goods cheaper abroad. U.S.
exports were a record $138.2 billion in August, government data show.
Net exports added 0.93 percentage point to U.S. gross domestic product
last quarter, offsetting a 1.05 percentage point drag from housing,
government data show.

``As long as the dollar's decline doesn't trigger inflation, it's a
good thing, helping the U.S. economy to stay out of recession,'' said
Robert Mundell, a professor at Columbia University in New York who won
the Nobel Prize for economics in 1999.

The Commerce Department's price index for personal consumption
expenditures excluding food and energy rose 1.8 percent in September
from a year earlier, the same as in August. The Fed forecasts the
index will increase 1.75 percent to 2 percent next year.

Wealthy clients at San Francisco-based Union Bank of California have
doubled their deposits in foreign currencies to $60 million the past
two months as a hedge against a decline, said Bradley Shairson, head
of currency and derivatives at the bank.

Buying Foreign Securities

U.S. investors bought $198 billion in foreign securities this year
through August, 72 percent more than in the same period last year,
Treasury Department data show.

That's the same strategy as sovereign wealth funds run by the largest
exporters and oil producers, including China, Singapore and Qatar,
said Stephen Jen, head of currency research at New York-based Morgan
Stanley.

The funds may grow to $17.5 trillion by 2017 from $2.5 trillion now
and shift more than $500 billion out of the dollar in the next three
years in search of better returns, he said.

``We're all thinking about diversifying out of the dollar,'' said Jen,
who is based in London. ``It's a very logical thing.''

To contact the reporter on this story: Bo Nielsen in New York at
Bnielsen4 at bloomberg.net ; Adriana Brasileiro in Rio de Janeiro at
abrasileiro at bloomberg.net
Last Updated: November 5, 2007 17:56 EST

--
Yoshie
<http://montages.blogspot.com/>